The Federal Tax Authority of UAE had mandated it for businesses to register under VAT, which had gone to roll out on January 1, by the deadline of December 4. But those who have not registered under VAT till the deadline now have another chance as the FTA has initiated to generate provisional tax registration numbers (TRNs) to traders that started to register late.
This move is taken to assist in tax compliance before VAT rollout on January 1. It is also declared that businesses which have not registered under the VAT by the deadline will be liable to pay Dh20,000 as a penalty.
Importance Of TRN Under UAE VAT
Under UAE VAT, it is compulsory for every business to describe TRN in its invoices in order to claim credits. Furthermore, businesses that registered before 4 December had already got their provisional TRNs and now remaining businesses will be getting the chance to register and get TRN number as well.
With the TRN, traders can check their IT system to describe it in all relevant documents related to tax filing from 1 January 2018. When the late registration for VAT the user pays to the high penalty to the Government.
With the help of TRN, it would be easy for businesses to communicate with the customers, vendors, and suppliers in processing invoices that will require TRN mentioning on all tax-related documents. This way of raising TRN and invoice processing will definitely help businesses to claim tax credit benefits for paid taxes.
As TRN number is the starting phase to move in the right direction of VAT and compliance is very important in implementing VAT, even provisional basis TRN, an initial step, is the most significant move.
The FTA said it had already issued provisional TRNs for tax groups and it will provide the same individual businesses shortly.
“Having a tax registration number is a very important requirement to the mention on invoices as it would enable businesses to claim credits.it Having obtained the TRN for a business can now configure their IT system and the mention it on all the tax documents from 1 January ” it said Nirav Shah, director of Fame Advisory.
According to Shah, the first step towards compliance is having a TRN number and hence its issuance even on a provisional basis is a step in the right direction.
He said “Businesses can now communicate the same to their suppliers, vendors and the customers so when they are raising invoices it would include the TRN on all tax documents and thus allow businesses to claim the credit of taxes paid”.
Problems In VAT Registration
As per the chairman of the Institute of Chartered Accountants of India, Naveen Sharma, VAT is going to roll out from 1 January 2018 in UAE and many businesses have still not received the TRN number yet.
Furthermore, many assesses have not rendered the correct documents which are necessary for registration. Coming to the fact that there are only a few days left in VAT implementation, the FTA has announced provisional registration to cover all the businesses. The registration will ensure the continuity of the business and the VAT can move smoothly in this case of better compliance.
This provisional registration move taken by the FTA will enhance the confidence of the business sector as many are tensed in the scope of not getting TRN numbers or worried about wrong information furnished at the time of initial registration.
The registration process was initiated in the last quarter of 2017 and most probably all businesses applied for registration for the very first time. The truth is as the process was new for all, many had made mistakes in lieu of ignorance. But provisional registration is the next chance from the FTA to evaluate the mistakes and fill the application again with full attention.
Moreover, the FTA has also advised the businesses to fill the form carefully, verify the data, and make sure to review the form before submitting to avoid further delay in VAT registration application.