As on the 100th day of VAT launch, around 275,000 companies and people were registered under VAT, which is about 98.8 per cent of the companies which were obliged to get VAT registration. This effectively puts UAE VAT at number one in the world in terms of VAT compliance ratio.
The 100 days of VAT were quite satisfactory. Out of the total registration applications received, 14,402 companies were asked to re-apply while 2,160 applications are still needed to be reviewed by the tax authority. As for the tax agent exam, 77 tax agents cleared it while 56 are currently working on fulfilling registration requirements. 21 tax agents are currently registered for the UAE.
In terms of customer support, more than 100,000 phone calls were answered and over 70,000 emails were replied during the first 100 days.
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Penalties for VAT Evasion
FTA is getting tough on businesses that plan to evade tax or do not register for VAT within the deadline. Penalties of more than 20,000 might be imposed on taxable companies in the UAE, which are still avoiding VAT registration.
During a media briefing on April 12, Khalid Ali Al Bustani, director general, FTA, said that the step to postpone the penalty for late registration was taken to motivate companies to register willingly by April 30. There is not likely to be any further extension of VAT registration deadline.
“Beyond this period, there will be no reason for the companies not to register and they will be subject to several penalties. We are working with economic departments to arrange roadshows also to help these (non-registered) companies register. Beyond that, we will take our role for auditing the companies and exchange information with other regulators who register companies to know which companies have not registered for VAT yet,” said Bustani.
He also said that records of any company may be audited by officials on suspicion of tax evasion. The companies have been given this opportunity to voluntarily register for VAT, otherwise there will be consequences. The government has given enough time for companies to understand and implement VAT law and now FTA is ready to take action against invaders.
There will be several monetary and other penalties, including a Dh20,000 penalty on late registrations, a separate penalty for late payment and late/no submission of returns, and also on conducting business without getting a TRN through VAT registration.
Al Bustani reported that most of the large businesses have submitted their returns, so the overall performance is good.
FTA introduces new mechanisms for Tax Payment
The FTA has recently announced that taxpayer would now be able to make payment of taxes via e-dirham and direct debit and GIBAN transfer from any registered bank or exchange house in the UAE.
The companies are advised to submit their tax returns on time to avoid penalty. It is not recommended to wait till 28th as the last minute rush might make it difficult to file returns for everyone. If the payment is not received by the FTA for the VAT return of any company, they might be subjected to a penalty.
“By now, everyone is aware of the VAT. It is in everyone’s knowledge that there is VAT in the UAE. Hence, it is an obligation on those companies who reach over Dh375,000 threshold to register for VAT. They are violating the law if they are not registering,” Al Bustani confirmed.
He also said that companies must not misunderstand postponement for freedom from VAT registration. All the taxable businesses are obliged to register for VAT and will be penalized if not done so.
Refund for Tourist
Speaking about refund provision for VAT paid by tourists, Al Bustani said that the FTA is working on it and aims to bring a strong system. “We issued a tender and now we are in the final stages. We are waiting for final approval to finalise the contract for the tourist refund operator,” said Bustani.