Taxpayers must ensure that VAT is correctly calculated, collected, and paid to the Federal Tax Authority (FTA) to avoid heavy penalties. Significant sanctions will seriously damage the commercial image between clients, authorities and banks. Recurring penalties do not bode well for maintaining strong cash flow, especially for SMEs and startups. If taxpayers seek the help of the best tax advisers in Dubai, Expand Corporate Services, building a strong business image by ensuring VAT compliance is not a big deal. However, companies must ensure that they are well informed in the key areas of VAT compliance listed here.

VAT Registration Thresholds in Dubai and the UAE

According to the VAT law, if the taxable supplies and imported goods (or services) exceed the mandatory threshold of AED 375,000 per year, the taxable person must register for VAT. The 2017 Federal Decree (8) on Value Added Tax stipulates that taxpayers who are eligible for compulsory registration must submit an application to the FTA within 30 days of being eligible. Failure to apply for VAT registration in the UAE within the specified time will result in a huge fine of AED 10,000.

If taxable benefits exceed AED 187,500 per year, companies can choose to register for VAT voluntarily.

Accounting Records for VAT

The UAE Value Added Tax Law stipulates that tax registrants must keep accounting books for at least five years after the end of the relevant tax period. The company needs to keep all external supply records, tax invoices for imported supplies, imported goods/services records, exported goods/services records, tax credit notes, deleted or used goods/services records, etc. Accurate VAT records can be a difficult job, but with our help, it can be done easily.

Timely VAT Returns

Companies subject to tax in the UAE must submit a VAT return to the FTA within 28 days after the end of the tax period established for each company. Companies must be fully prepared to declare their value added tax to the FTA, since the declaration process must be done online through the FTA portal. A form called VAT201 must be completed, which can be accessed on the FTA portal.

Companies must be very careful when filing VAT returns, because the first incorrect tax return will be fined with Dhs1000, and if it is repeated, it will be fined with Dhs2000. Inaccurate VAT returns will also impose percentage-based penalties on amounts not paid to the FTA due to errors. If the VAT return is not submitted within the specified time, you will be fined 1,000 dirhams for the first time and 2,000 dirhams if you violate the regulations again. Companies can submit their VAT returns through Expand Corporate Services, one of the leading business setup consultants in Dubai, Dubai FTA approved tax agents in order to avoid errors and penalties.

FTA Tax Audits and Being Prepared

The FTA can audit your company to ensure that it meets VAT standards. During the tax audit, FTA officials will check tax returns and other related information, and require business owners to keep proper records. According to the Tax Procedure Law, the FTA can conduct a tax audit for any reason at any time, but the Administration will notify the company five days before the start of the audit.

The FTA will review accounting systems, production taxes, input taxes and VAT returns. Companies in Dubai or the United Arab Emirates and their tax agents must cooperate with FTA officials during tax audits. If the company does not help facilitate the work of the tax auditor, it will be fined Dh20,000. Taxable companies should consult us today to assist and prepare for FTA tax audits in advance.

The failure of the person conducting Business to submit the data, records and documents related to Tax in Arabic to the Authority when requested will be subject to DH20,000 fine.

When it comes to ensuring VAT compliance in Dubai and the UAE, companies cannot take risks. Maintaining proper records and submitting accurate and timely VAT returns are key areas of compliance that can help companies establish a positive image. Companies often encounter difficulties in VAT compliance; however, our services are a reliable solution to all of your VAT-related problems.

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