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vat tips for entrepreneurs
Post By: admin September 09 2022

Some top VAT tips for entrepreneurs in UAE to avoid hefty penalties

VAT has been implemented in UAE since January 1st, 2018. After its implementation, everyone liable to get registered under the VAT regime must get registered as it is mandatory. Every registered person must file returns on time without any delay, and they must collect the VAT as per the regulations laid down by the authorities. Non-compliance with the provisions of VAT will attract huge penalties and further legal complications. Below are some tips which entrepreneurs can use to avoid huge penalties concerning VAT:

  • VAT Registration on TIME

Every person who supplies taxable goods or services and who satisfies the eligibility criteria for registration must get themselves registered without any delay. If they fail to do so, then they will be liable for an amount equal to AED 20000 as a result of non-compliance. Also, they won't be allowed to make any further sales until they get registered and receive the registration certificate.

You can Also Read: Effects of VAT on the Education Sector in the UAE

  • Keeping an accurate and regular book of accounts and transaction details

Every registered person who is liable to pay VAT must collect and maintain the books of account with all the information related to the transactions conducted, as this may be required while filing VAT returns and at the time of any audit process. Accurate documents will also help the firm to claim input tax without any delay. It is one of the mandatory requirements laid down by the UAE VAT law. In the event of any inspection conducted by the authorities, these documents are the only evidence that can be used to furnish the tax liability and clarify the queries of the authorities.

  • Accurate collection of VAT 

It is the entrepreneurs or the business firms that act as an intermediary between the tax authority and the customers who collect tax on behalf of the authority. It must ensure that the correct amount of tax is collected and remitted to the authority within the prescribed limits and must follow all the compliance. Failure to remit tax will result in penalties and fines that can be five times more than the actual tax amount to be remitted.

  • Alter the control procedures and integral processes of accounting to comply with tax laws.

The firms and the start-ups must make necessary changes within the organization to stay complied with the VAT laws. The firms can adopt new accounting software which will automatically charge the VAT rate on the transaction with minimal errors. Such alterations must be made to avoid hefty fines.

  • Filing the VAT return within the timeframe prescribed

The registered taxable person must ensure that they file the VAT returns on time without any delay to the authorities. They must file monthly, quarterly, and annual returns as per their annual turnover. If they fail to file so, then they may be liable to pay an amount equal to AED 1000 and it may increase if any subsequent delay is made. CDA, vat consultants in Dubai, provide prompt assistance for filing VAT.

  • Provide training to the staff regarding VAT compliance

The staff must be provided with important insights regarding the implementation of VAT on different goods and services. They must be trained regarding zero-rated, exempted supplies, etc., and the important compliance formalities which must be met.

You can also Read: VAT Guide Specifying Major Obligations for Car Dealers and Service Centres

  • Proper issuance of the Tax Invoice and in the prescribed format 

The registered person must ensure to issue the tax invoice within the time format prescribed by the law, i.e., 14 days from the supply of the goods and services. It must include the name, address, and tax registration number of the supplier along with the unique number, date of the issue, price of the supply, quantity, rate of tax, the amount payable, etc.

  • Adherence to specific deadlines

It is always the best course of action to appoint an auditing and accounting firm that can assist you with filing the VAT returns, remitting taxes, etc. on time. By doing so, the firm can avoid huge penalties that may be imposed due to delay in any of the compliance procedures. The firm can also adhere to the deadlines.

  • Stay updated regarding the UAE VAT law

The registered person must study the VAT law and must have adequate knowledge regarding its implementation. He must also try to stay updated regarding the different alterations that may be made to the laws.

  • Adopting accounting and invoicing software

The firms or the entrepreneurs should disburse adequate funds for the installation of accounting and invoicing software. Installing these will help the firm to facilitate efficient accounting with a minimum of human errors. Adopting invoicing software will help the firm to issue an invoice on time without delay and file returns as well. 

How can CDA help you avoid fines and penalties?

Being a well-known auditing and accounting firm in UAE, it always looks to protect its clients from huge penalties and fines which may rise due to non-compliance and other legal issues. CDA ensures if their clients are in compliance or not with the regulations. If they fail to comply, then CDA provides assistance for staying compliant. CDA, along with accounting and auditing, provides various services such as VAT return filing, compliance services etc. To find out more about the services in detail, feel free to contact CDA.