UAE Guide: What are ways to avoid Penalties in Dubai VAT Law?

UAE VAT Return

With the introduction of VAT Law in Dubai, business houses face problems and make small mistakes. These mistakes can cost the entity higher of AED 50,000 or 50% of Tax amount. As VAT is new to the region, it is imperative for business owners to be aware and comply with the new regulations in order to avoid high penalties. Penalties and fines are unwanted burden for your business.

Seven Tips

    1. Timely registration of your business
      A business entity must get itself registered under VAT laws if its aggregate taxable supplies exceed AED 375,000 in a year. However, a business entity may get itself registered under such law voluntarily if its aggregate taxable supplies exceed AED 187,500 in a year.
    2. Maintain Proper and accurate books of accounts
      The law requires businesses to keep a correct record of all their business income, costs and other associated VAT charges.
    3. Charge and Collect VAT in Dubai’, UAE
      Every business plays a role of collecting VAT on behalf of the government. Hence, they do this properly in order to avoid penalty.
    4. Timely filing of VAT return in Dubai, UAE
      VAT returns must be filed monthly if your company has an annual turnover above AED 150 million Or else quarterly.
    5. Obtain clarity on zero-rates and exempt supplies
      The FTA has exempted some businesses and some goods from VAT. Being zero-rated goods means that the goods are still VAT taxable, but at zero percent rate.
    6. Reverse Charge
      Reverse charges are the amount of VAT one would have paid on goods or services if they were purchased in the UAE. This case is seen when goods and services are imported from outside the GCC.
    7. Get the basics right
      You must aware of the basics of Dubai VAT law and take expert expertise whenever in doubt to avoid penalties under VAT law.

Points to Remember

    1. Avoid delay in getting or amending VAT registration, in case of any changes.
    2. Avoid poor planning of tax governance at your firm.
    3. Avoid failure to issue a valid VAT complied tax invoice in Dubai, UAE.
    4. Avoid Non Maintenance of proper books of accounts.
    5. Avoid delay in hiring of tax expertise.
    6. Avoid late filing or non-filing of periodic tax invoices.
    7. Avoid claiming wrong input of VAT in Dubai, UAE.

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