Now Reading
VAT: UAE extends penalty deadline for non-registered firms

VAT: UAE extends penalty deadline for non-registered firms

Businesses that are late in registering with the authority will be exempt from administrative penalties until April 30

The UAE’s Federal Tax Authority (FTA) has decided not to penalise companies that haven’t registered for value added tax (VAT) until an extended deadline of April 30.

At its fourth board meeting, the FTA approved a plan to exempt businesses that are late in registering with the authority from administrative penalties until April 30, 2018.

“This takes into consideration the lack of readiness of some businesses during the first phase of VAT implementation, and reflects FTA’s commitment to assisting businesses and encouraging them to be compliant with the tax procedures and to avoid administrative penalties,” a statement said.

The UAE implemented the 5 per cent VAT from the start of this year, and businesses were initially required to register by the end of last year.

In the first phase, all businesses that sell goods or services exceeding Dhs375,000 are required to submit tax returns and pay their dues within a set timeframe or face penalties. They must also keep records of all supplies and imports and goods and services and related documents.

The country’s tax regulation states that returns must be received no later than 28 days after the end of the tax period.

The penalty for those who fail to pay tax is no less than Dhs500 and no more than triple the value of the tax on the transaction in question. A first incorrect tax filing will result in a fine of Dhs3,000. Each following error will then result in a Dhs5,000 fine.

Also read: All VAT-registered UAE firms must submit returns, pay tax by Feb-end

During its meeting, the FTA also reviewed the outcome of the tourist refund tender. The integrated refund system – currently being developed – will cover outlets and shops in the country.

The board urged to complete procedures for implementing the system, the statement added.

Sheikh Hamdan bin Rashid Al Maktoum, deputy ruler of Dubai, finance minister and FTA chairman said: “The results of the periodic follow-up show that the response levels to the tax system by the business sectors and all segments of society are very satisfactory. There is a steady increase in the tax compliance ratios, which confirms the success of the model adopted by the FTA which is based on encouraging self-compliance by businesses through easy electronic registration and electronic compliance.

“The foremost goal [of the tax system] is to promote economic diversification by providing sustainable sources of income for future generations to finance strategic projects such as infrastructure development and deliver more public services for citizens and residents.”

Also read: Most residents expect VAT to be a challenge for UAE – survey

© 2020 MOTIVATE MEDIA GROUP. ALL RIGHTS RESERVED.

Scroll To Top