Statics and Overview of VAT in UAE Since 2018


The Federal Tax Authority (FTA) has recently stated that the number of businesses registered for (Value Added Tax) VAT in UAE has increased to 312,000 since 2018. After the completion of two years since the implementation of VAT in UAE, the United Arab Emirates (UAE) has witnessed success and surpassed several developed countries over the course of decades.

VAT Registration in the UAE is mandatory for companies who have a turnover in excess of AED 375,000/- in the previous 12-month period.

The Federal Tax Authority (FTA) has called on persons who have registered for VAT in UAE to follow the key guidelines in order to comply with the UAE VAT Law.

 Statics and Overview of VAT in UAE Since 2018

The FTA statistics revealed that 296,000 businesses had registered for the UAE VAT. So overall, an increase of 5.4 percent was seen in 2019 which is a reasonable increase in the VAT registration applications.

Overall the Federal Tax Authority (FTA) has so far received a total of 3.2 million electronic tax refund applications since the implementation of UAE VAT  till 2019 out of which 1.52 million applications were received till June 2019 and over 1.68 million application was received in the second half of 2019 which means an outstanding growth of 110.53 percent was noticed in the second half of 2019.

Daily an average increase of 2.64 times was seen in the refund applications for tourist, from 372,000 applications in the first month of the application now it has reached to 983,000 per day till December 2019.

Planet is the company that is approved and authorized by the FTA to manage the tourist refund scheme in UAE . They have a number of outlets and kiosks which are fully equipped to undergo all the refund automated process.

Today there are 12,310 retail outlets that are connected electronically through the FTA system which is a good increase and at present, there are 52 self-service kiosks to recover VAT by tourists before leaving the country. Employees are present at the kiosk to provide all the necessary help to the tourist.

Over 3.2 Million Electronic Tax Refund applications were received by the FTA till the end of 2019.

The Director-General of the Federal Tax Authority, Mr. Khalid Ali Al Bustani, announced that they will launch a new electronic platform in order to ensure clarity in the procedures and to reduce the ambiguity among the taxpayers.

The FTA will continue its efforts to increase the awareness among business organizations, consumer sectors, and taxpayers by constantly issuing guidelines, clarifications, seminars and workshops.

There will also be a launch of a new electronic platform for the UAE residents to get a refund on the vat paid by them on their new houses.

Why You Should hire Only Registered Tax Agents as Your VAT Consultants?

The Director-General of the Federal Tax Authority, Mr. Khalid Ali Al Bustani, has mentioned that there was a decline in the VAT errors over the past period.

Further, the Director-General said the companies or individuals registered under UAE VAT need to be careful while giving the task of VAT Registration and filing of the tax returns to the people who do not have a good understanding of the VAT Law.

In order to ensure VAT Compliance, it is better to appoint only approved VAT consultants who is appointed as a Tax Agent to deal with such matters.

Further, the authority has informed not to assign any such task to people who are not approved by the FTA and who do not possess sufficient expertise in this field, in order to avoid making mistakes.

What Kind of VAT Errors Can be Avoided?

The Federal Tax Authority has called the taxable persons to comply with the regulations of the UAE VAT Law. The FTA has issued a number of clarifications and guidelines so that the VAT Registered persons have sufficient clarity on the UAE VAT Law.

Some of the guidelines include avoiding mistakes in the tax invoice format, failure in disclosing line-wise items, rate of tax, failure to list price that includes VAT, failure to support items listed in receipts and mistakes occurred in the refund applications due to the missing details on product descriptions and tax registration numbers.

Additional errors noticed are failure to obtain the necessary documents for exports which may be for direct export or indirect export and improper details in the documents. If the taxable person fails to obtain such documents, then they will not be able to prove such transactions as zero-rated and hence the taxability can vary. Mistakes were also seen in claiming input on personal entertainment, transport and telecommunications expenses and failure to disclose zero-rated supplies and exempt supplies as per the adopted tax invoice form.

During the last two years, FTA has seen a growth in the submission of  Voluntary Disclosure Forms (VDF) 211, because of the errors or mistakes committed by the taxpayers while filing the VAT returns. FTA has also cautioned the taxpayers on the mistakes committed by them on tax invoices, evaluations, tax refund applications, missing documents, wrongly claiming input for entertainment related services and many others.

This is an indication that taxpayers are aware and are now keen on complying with the UAE VAT Law. FTA is constantly upgrading the FTA portal in order to bring more transparency in the UAE tax system.

Importance of Tax Agent for Businesses in the UAE?

Tax Agents play a prominent role in ensuring the success of the tax system for businesses in the UAE. The number of Tax Agents in the UAE is growing steadily. At present, the FTA has registered 454 tax agents after they met the necessary qualification by clearing the exams conducted by them.

The authority has informed businesses to deal only with FTA approved tax agents in order to help business concerns meet with the VAT obligations. The FTA is also conducting regular seminars and workshops for the tax agents to give clarification and to reduce the ambiguity in the treatment of transactions.

The Federal Tax Authority indeed puts a lot of effort to provide clear and simple procedures for the implementation of federal taxes.

Source: Khaleej Times  

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