Ever since the introduction of VAT in the UAE – there have been questions and some more. With regulated tax agents in the UAE – businesses are trying to sort their VAT-related issues, given the heavy penalties charged on non-compliance. Here are a couple of common mistakes that businesses tend to make and must always avoid.
- It’s important to record the sale in the correct emirate – it isn’t dependent on the customer location but on the location of your fixed business.
- Most businesses fail to notify the FTA that tax is based on margins, wherein if you are selling certain goods like coins, stamps, and second-hand goods – you must charge VAT on the profit margin.
- Not having an invoice-wise working of the returns – it’s important to maintain this, because if ever the FTA demands an audit – these details will be required.
- It’s crucial to file returns and make payments on time, or else there is a heavy penalty levied on the business. Given that most businesses tend to miss out on dates, it’s important to indulge in VAT consultancy services in Abu Dhabi and Dubai.
- Be careful of the claims – and ensure you are making the right claims and on the right purchases.
- If your business makes a zero-rated sale or an exempt sale – it doesn’t mean that you don’t show it. Even if you file everything properly and miss out on this information – it can have repercussions. Identify and disclose them in your return submission.
- Reverse Charging Mechanisms is another place where businesses need to be careful. While disclosing transactions for returns, companies fail to disclose the reverse charging mechanisms, given they don’t have any tax effect.
- Timing is crucial when it comes to VAT, and it should be charged at the right time. There have been instances where businesses fail to insert supplies in the wrong returns, although they are supplied much later.
These are a few of the common VAT-related mistakes that businesses make. However, if you want to avoid this, it’s good to indulge in VAT health check services in UAE and stay in compliance with the VAT laws. To know more, reach out to TRC Pamco, a leading VAT consultancy in Abu Dhabi and Dubai.