Common Mistakes Companies Make When Filing VAT Returns in UAE3 min read

Value Added Tax or VAT was introduced in the United Arab Emirates on January 1st, 2018. Since then, all businesses registered for VAT must follow the rules and file VAT returns on time to the Federal Tax Authority (FTA). Filing VAT returns correctly is very important. Even a small mistake can lead to heavy fines and penalties from the FTA.

Here are some of the most common errors businesses make when filing their VAT returns in UAE:

Not Recording Zero-Rated and Exempt Sales

Many companies accurately file their output VAT, input VAT, payables and receivables. However, they often forget to record their zero-rated and tax-exempt sales. These types of sales should still be reported, even though no VAT is charged on them. Businesses must identify and accurately state all zero-rated and exempt sales.

Poor Record Keeping

The FTA requires all VAT-registered businesses to maintain detailed transaction records for at least 5 years. This includes purchase and sales records, payments, imports/exports, bank statements, payroll records, VAT ledgers and more. Proper record keeping is mandatory but often lacking.

Late or Missed VAT Return Filing

When registering for VAT, companies are given strict deadlines for filing returns. However, many businesses delay or completely miss these filing deadlines. This results in penalties from the FTA. Using VAT return filing services in Dubai can help ensure timely filing.

Incorrect VAT Calculations

Businesses must apply the correct VAT rates when calculating the tax amounts. Even a small calculation error can result in huge costs from fines and penalties down the road. Companies should regularly check for VAT rate updates and ensure calculations are accurate.

Reverse Charge Mechanism Errors

The reverse charge mechanism applies when goods or services are imported into UAE, even if the overseas supplier did not charge VAT. If the company’s VAT number is not linked to its customs code, it becomes difficult to account for this import VAT. Companies may overlook these transactions thinking no VAT was charged.

Lack of VAT Compliance Planning

VAT is a new system for UAE businesses, so ensuring full compliance with the laws can be challenging. Many companies lack a proper strategy and knowledgeable staff for handling VAT correctly. This opens them up to errors and non-compliance issues. VAT return filing services in Dubai can provide the needed expertise.

Keeping good records, calculating VAT correctly, filing returns on time, and understanding reverse charge rules are all very important to avoid costly VAT penalties. However, VAT laws are complicated and change frequently.

Because of this, most companies in Dubai choose to use professional VAT return filing services. VAT experts make sure the company follows all compliances properly. They handle all VAT filings accurately to prevent any errors that could lead to fines or audits from the Federal Tax Authority.

At BHMJ Associates, our team specializes in VAT accounting and compliance services made specifically for each client’s business needs. We always stay up-to-date on VAT laws. We can seamlessly manage the entire VAT process for your company. This gives you peace of mind, knowing VAT responsibilities are handled correctly by professionals.

Do not risk penalties, audits or other problems due to mistakes in VAT return filing. Use the VAT return filing services in Dubai from BHMJ Associates. We ensure your company stays fully compliant while minimizing costs and maximizing VAT efficiency. Contact us today to learn more about how we can assist your business.

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