Value-added tax is still quite complicated for business organizations in the UAE after years of its implementation. The tax is applied according to the value of the goods and services instead of a fixed value. Moreover, there are a few zero-rated and exempt applications too.
Business organizations have to file returns considering the value of goods and services and the applicable rate. It can be difficult to understand at times and lead to mistakes. However, mistakes in VAT return filing can lead to more issues, so you must try to avoid them.
Keep scrolling down into the details of this article to learn about VAT return filing mistakes you should beware of and become a responsible business entity.
Top 6 VAT Return Filing Mistakes You Should Not Repeat
The taxation system in the UAE is a little different from other countries of the world. Business entities with a specific sales threshold must register for VAT and file for returns at specific periods. Return filing often confuses the business setups and makes them commit mistakes that are not tolerable.
Here are the most notable VAT return filing mistakes you should never repeat to avoid penalties and other types of legal actions against your business.
1. Improper Record Maintenance
Improper record maintenance is the first VAT return filing mistake every organization must watch out for. The business setups must maintain proper records of all their transactions and documents and produce them to the authorities when required. It can include bank statements, business expenditure details, payment details, import and export documents, etc. Maintaining such records regularly and filing for VAT returns is often overwhelming. Many setups hire VAT registration companies in UAE and let experts maintain records and file returns on their behalf to avoid any mistakes.
2. Forgetting Zero-Rated And Exempt Sales
Forgetting zero-rated or exempt sales is the next major VAT return filing mistake you should never make. The business setups need to manage input, output, payable and receivable VAT while filing for the returns. They also need to declare the zero-rated and exempt sales so the total applicable VAT is adjusted accordingly. Failure to disclose VAT returns efficiently highlight poor knowledge of the organization in taxation matter. It can also be viewed as a deliberate effort to misguide the authorities. It can lead to fines and penalties, so make sure to avoid it.
3. Miscalculated VAT
Miscalculating VAT is one of the biggest mistakes in VAT return filing that you must watch out for. Authorities have already shared a specific percentage of value-added tax applied on various goods and services across various emirates. The business setups are responsible for identifying and calculating the VAT rate applicable for their goods and services and filing returns accordingly. Calculating VAT returns higher or lower than the actual payable amount can lead to fines and other types of penalties. So handle it carefully if you do not want to deal with issues.
4. Claiming VAT Return On Non-Permitted Expense
Claiming a VAT return on non-permitted expenses is another grave VAT return filing mistake you must watch out for. Entertainment, fuel usage at the personal level, and some types of employee expenses do not come under VAT in the UAE. Due to this, business organizations cannot claim VAT returns over such expenses. Trying to do so, even by mistake, will be considered as an attempt to deceive the authorities. It will not only lead to fines and penalties but cause a loss of reputation too. So, make sure to avoid and seek help from professional bodies if you must.
5. Marking Sales In Wrong Emirate
Marking sales in the wrong emirate is another common VAT return filing mistake you must watch out for. The value-added tax and applicable return rates can vary across various emirates in the UAE. Business transactions and sales among the emirates will have to be more careful about the applicable rate as well as the emirate under which it falls. Handling such peculiar details requires extensive knowledge of VAT. Ensure you are knowledgeable enough or get experts on board to deal with the matter efficiently.
6. Late Or Missed Return Filling
Late or missed return filing is the last VAT return filing mistake every business should watch out for. The authorities have set a specific time period by which every VAT registrant entity is liable to file returns. Missing the date shows the unwillingness of the setup to comply with legal tax requirements. It can lead to penalties and may even ruin their reputation among business communities. The late filing also invites fines and penalties. You can hire VAT registration companies in UAE, let experts manage tax matters efficiently, and help you achieve a higher reputation.
Are You Concerned About VAT Return Filing?
If you are worried about committing mistakes, there is only one solution. Contact VAT consultants and let the experts perfectly manage all taxation matters to enjoy profits.