As far as VAT Registration is concerned, the Federal Tax Authority (FTA) has extended the VAT Registration cut-off date. The companies which were required to apply for VAT Registration in the beginning of the year for VAT has extended until April 30th 2018 without any penalty. The FTA is sure to get bumpy on those businesses who have not applied for VAT Registration, as there has been ample time by now to understand and comply with this new UAE VAT law in the region.
The FTA has zero tolerance for those who do not comply with the Tax Laws in the UAE. The avoidance of obeying with VAT in the UAE will be attracting huge penalty tickets to the businesses in UAE.
Am I liable to pay tax for the period from 1st January 2018 till the date of registration?
As mentioned above, if your company was supposed to be registered (registration threshold AED 375,000/-) on or before 1st January 2018 but have not been registered, only the penalty for non-registration on AED 20,000/- has been waived off till 30th April 2018. However, you stand responsible to calculate tax for the period from 1st January 2018 till the date of registration. You are also liable to pay the due tax amount to the FTA.
Case One: A Company’s turnover crossed the minimum registration threshold in the year 2017 but not registered for VAT within the due date:
For Example: If the turnover of the company for the year 2017 is AED Eight Million. Suppose your sales from January 1st to 30th April 2018 is AED Two Million you are liable to collect 5% of the above i.e., AED 50,000/-. If you have not registered until 30th April 2018 though you should have, your non-registration penalty is waived off. The Tax liability of AED 50,000/- shall be implied. Since, you were not registered, you wouldn’t have issued a tax invoice to the customers and not collected tax as well. This will be a cost to your business.
Case Two: A Company’s turn over in 2017 is less than the minimum threshold limit:
For Example: In another case if your minimum threshold for registration was not crossed till date but only in the current month it is crossed you should immediately apply for VAT Registration. However, in such situation you are not responsible to charge tax for the period prior to your date of registration.
Case Three: A company is newly formed in the year 2018.
For example: In the case of a new company, it is mandatory to proceed for VAT Registration only if their sales from the date of Company formation till the date on submission of application for VAT Registration is crossing AED 375,000/-. Even in case of their expected turnover for subsequent thirty days is more than the above threshold limit, they have to apply for VAT Registration.
What is the price you have to pay for not complying with VAT in the UAE?
For those who are not taking taxes in the UAE seriously, there are huge prices that would be incurred.
AED 20,000/- Failure of a taxable person to submit the VAT registration within the time frame (extended upto 30th April 2018).
AED 1,000/- Failure for the first time in VAT Return Filing.
AED 2,000/- Subsequent failure within 24 months for not Filing the VAT Return.
AED 15,000/- Failure to display prices without including tax.
AED 10,000/- Failure to maintain records for the first time.
AED 50,000/- Subsequent failure to maintain the records.
What is the need for maintaining proper VAT records for businesses?
The FTA will be commencing Tax Audit for the companies to review how well VAT implementation has been complied in their businesses in order to know whether the businesses have maintained their records properly or not. The businesses must maintain their records properly to be ready for a Tax Audit anytime by the FTA.
How far have we reached within 100 days of VAT applicability in the UAE?
The records shows that around 275,000/- businesses in the UAE have registered for VAT within the 100 days of the inception of TAXs since 1st January 2018.
As per the records from the FTA, 14,402 companies have been redirected to submit their VAT applications again and 2,160 VAT applications are currently pending now with the tax authority.
The FTA has opened doors for TAX Agents and 77 of the TAX Agents have cleared the FTA exam. 21 of the TAX Agents are already registered while the remaining 56 are under the process of completing the registration formalities.
Why is VAT Return Filing important?
In order to comply with the UAE VAT law, businesses who have registered for UAE VAT have to file their VAT Returns on time. This will avoid penalties and consequences for not obliging with the TAX laws in the region.
The First VAT Return Filing for around 80,000 businesses in the UAE will be submitting their VAT returns by April 2018. All the businesses and taxable person has to submit the VAT Return within 28 days from the end of each Tax period which has been given by the FTA respectively. The 28th day from the end of a tax period is legally the last day to file the VAT Returns however, you can submit your VAT Returns as early as you can within the 28 days in order to avoid any delay or technical glitch.
The FTA has also introduced new tax-paying mechanism to make TAX payments easier for each businesses and individuals. The VAT Return Filing now can also be processed through direct debit and GIBAN transfer from any exchanges or banks.
Why choose BMS Auditing as your VAT Consultants?
BMS Auditing engages a team of highly qualified professionals and Chartered Accountants with vast knowledge in Taxation.
We offer a wide range of VAT Services all over UAE ranging from VAT Registration, VAT Implementation, VAT Compliance Review, VAT Advisory & VAT Return Filing Services with the best tailored solutions as per the requirements.