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How to Reduce VAT Penalties in Dubai, UAE

22/01/2021

The Federal Tax Authority( FTA) is the regulatory body in the United Arab Emirates that holds charge of the VAT laws of the nation, managing  & collecting federal taxes  & penalties or fines. Any violation in the terms of the VAT Law in UAE can lead to some fines & penalties.  So, business organizations and entrepreneurs must be aware of the country’s tax laws to try effective financial planning.  There are certain tips for UAE businesses to reduce & avoid financial penalties that may be imposed due to violations, errors, or incorrect record-keeping. The given below are such tips to reduce & avoid such VAT Penalties in Dubai, UAE.

Register for VAT

Each organization offering taxable goods or services with a yearly income of AED 367,000 or more is needed to register for VAT. In any case, those with a yearly income between AED 200,000 and AED 367,000 will have the choice to enroll. The FTA has declared that organizations should register within the advised period, & the inability to do so could bring about non-compliance punishments as extreme as AED 20,000. What's more,  if any unregistered organizations are there, then it will be needed to stop deals until they get their TRC(Tax Registration Certificate).

Record All Transactions

The  UAE VAT law requires organizations that meet the minimum annual turnover which is proven through monetary records should register & track all their business pay, costs & other related VAT charges while guaranteeing all records are updated. These records will be submitted to the FTA in the Arabic language. However, it is desirable for organizations that don't meet the minimum yearly turnover to keep up with all the transactions. If you fail to keep such records, in the future if an inspection occurs, you don't have any evidence to prove your transaction and it will lead to some severe penalties or fines.

Comprehend Zero Rates & Exempt Suppliers

The Federal Tax Authority has exempted a few organizations from tax on priority sectors. Occupying a zero-rated supplier implies that the goods being provided are still VAT taxable however at the rate of 0%. Consequently, your organization still needed to record & report all stocks. Such ventures incorporate hospitals, clinics, real estate builders, schools, airlines  & jewelry.

File VAT Return

VAT returns should be filed monthly if your organization has a yearly turnover above AED 150 million. Organizations should check & permit according to tax periods referenced in their VAT certificate to avoid any late delay filing  & payment to avoid any penalties or fines.

Reverse Charges

Reverse charges are the measure of VAT one would have paid on goods or services if they were bought in the UAE. These charges apply when goods or services are imported from outside the Gulf Cooperation Council.

Be Aware of The Basic Rights

The tax invoice needs to be circulated in fourteen days from the supply date & it should cover the name, address  & TRN of the registrant who is making the supply. To avoid any penalties or fines in your business, you have to train your staff and be aware of your rights. It can be provided by giving employees job training, plans to raise & explain VAT queries & rights.

If you need any VAT related services, you can contact the best VAT consultants in Dubai and UAE, ARC Associates. We can assist you with the right help to deal with all your concerns about VAT & invigorated with the latest changes in VAT rules & regulations. We serve you to reach the final result of VAT returns with expert guidance which benefits you catalyze timing of cash flows perfectly. Our highly skilled professionals are well experienced with the Tax Law together with the practical VAT implementation in UAE. So, if you need any VAT services in UAE- Dubai, we are happy to assist you. We have our main head offices in Dubai and provide our clients with a broad range of the best auditing services in Abu Dhabi & Sharjah too. So, get in touch with us today, we are happy to help your business grow by saving from violations and penalties.