VAT was introduced in 2018. It has made many companies grappling with many changes in the corporate ground. Companies have had to be involved with innovative and several other protocols and compliance obligations. Registration for VAT which is now a requirement for businesses working in the UAE, is one of the major engagements. The VAT registration process is uptight with complexities and many problems for making mistakes. In this article, we will see the common Mistakes to Avoid During VAT Registration in UAE.
The most common mistake usually businesses make during VAT registration in the UAE is submitting partial documentation. The UAE Federal Tax Authority needs detailed documents to complete the registration process such as;
Trade licenses
Emirates ID copies of partners
Passport copies
Bank account details
Failure to deliver all the required documents can lead to long delays or rejection of the VAT registration application. Make sure that you collect all compulsory documentation to avoid this mistake before starting the registration process.
The most crucial mistake with VAT registration is missing the registration deadline. Companies are compulsory to register for VAT within 30 days during which the taxable turnover surpasses the fixed registration threshold.
Make sure not to miss the deadline because it may lead you to fines as set by the Federal Tax Authority. It is imperative for companies to keep an earlier eye on the upsurge in taxable turnover and be ready for registration early once they notice that they are getting closer to the threshold.
Businesses are wrongly applying 0% rating treatment to their supplies without knowing the mandatory threshold. Companies are mandatory to conduct a proper valuation of the income upon which VAT is calculated. This assessment must include all applicable categories of supplies. Failure to consider some essentials and supplies leads you to precise figures. It is recommended to engage with Farahat & Co. so their experts can help you evaluate an accurate threshold.
Businesses have to charge the accurate rate of VAT on their supplies. The rate can vary depending on the type of goods or services being supplied. Make sure to charge the right rate because it can lead you toward hefty penalties and legal clashes with the FTA. For example, the company was fined AED 1.13 million for charging the standard rate of VAT instead of the 0 rate of VAT on services provided to a client outside the UAE. Businesses must ensure that they know the different VAT rates valid for their supplies and charge the precise rate of VAT to avoid hefty consequences and legal penalties.
Several businesses underestimate the complications of the VAT registration process. They try to handle it self-reliantly but unfortunately; they make some big mistakes and compliance problems. It is recommended to get assistance from a professional VAT consultant or tax advisor such as Farahat & Co. Their proficient team can significantly assist businesses in handling the registration process easily. The expert team of Farahat & Co. has ability to provide the;
Valuable guidance
Ensure compliance with rules
Enhance your VAT strategy to minimize tax liabilities
Capitalizing on professional help can eventually save your time, struggle, and resources while guaranteeing a unified registration experience.
The VAT registration process in Dubai is not that easy. It should be carefully planned, performed with attention to detail, and based on the active preparation and understanding of the tax rules. Businesses could avoid many mistakes surrounding registration, such as missing deadlines, incorrect valuation of the threshold, incomplete documentation, and failing to charge the correct rate of VAT. Farahat & Co. is a reputed name in the UAE. Their expert team can help to avoid such common mistakes and ensure a smooth process.
