Value Added Tax: The Reckoning
By next month, companies that are obligated to register for Value Added Tax but have not completed the process yet will begin receiving heavy penalties from the Federal Tax Authority.
Late registration penalties have been postponed to April 30, so as to allow companies who have not yet registered a chance to catch up. It is highly unlikely that penalties are going to be postponed for a second time.
There will be several penalties for businesses that are still not registered for VAT:
- AED20,000 for late registration;
- Separate fines for late payment
- Separate fines for not submitting returns
Compliance for the impending implementation of Value Added Tax is currently at 98.8%, one of the highest ratios for compliance in the world.
To make payments more expedient for businesses, the FTA has also introduced new mechanisms for paying taxes. Businesses can now pay their taxes through direct debit and/or GIBAN transfer from any exchange houses or banks.
With these new developments, you may have noticed that a GIBAN number has appeared on your FTA dashboard. This is a unique IBAN number that lets you make your Value Added Tax payments through most of the UAE banks. When you put in the FTA as a beneficiary, your GIBAN can be used as the Payees account number. Your GIBAN can also be used to make a payment at your bank.
The FTA advises that for every payment made, you verify that the transaction has occurred by logging back into your FTA online e-service account twenty-four hours after completing it to ensure that the payment has been made and correctly credited to your account. This section can be found under Transaction History.
With total VAT implementation right around the corner, the Dubai Chamber of Commerce and Industry recently hosted a workshop that highlighted the essential aspects of VAT for businesses and professionals.
The workshop, named “The Essentials of VAT,” was held at the Dubai Chamber’s headquarters in Deira, organised with BSA Ahmad Bin Hezeem & Associates LLP and Moore Stephens LLP.