There
is no doubt that complying with the terms and conditions of the value-added tax
is one of the most complicated tasks in the United Arab Emirates. However,
there is also no denying to the truth that following all the rules and
regulations is the utmost responsibility of every business organization in the
region. It equally includes the businesses operating at the international
level.
The
tax collection department in the UAE has fixed some administrative penalties
and fines for the businesses that fail to comply with the value-added tax law.
The business parties that are not well informed about the terms and conditions
of VAT law, often face issues with its compliance and non-compliance. Knowing about
the administrative penalties can help them save the trouble.
This article aims to highlight the administrative penalties for noncompliance with
the value-added
tax in the UAE.
Top 5 Types of Penalties You Can Face Over Noncompliance of VAT
Tax
money holds significant importance for any country in the world. It is the
revenue that contributes to the development and progress of any society. The United The Arab Emirates has implemented the value-added tax on its population so that
they can also benefit from it while contributing to the economy. However,
non-compliance makes the authorities impose restrictions and penalties.
The
following are some of the most common types of penalties the business
authorities can face over the noncompliance of VAT law in the United Arab
Emirates.
1. Penalties Associated
with VAT Registration
The
authorities in the UAE have fixed a threshold of supplies for tax payment. The
businesses that exceed the limit have the responsibility of registering
themselves under VAT. After the registration, they will get a tax registration
number for further record maintenance.
The
taxable businesses are given the deadline of throaty days to comply with the
registration process. However, failure to do so makes them eligible to pay a
fine of AED 20,000. The registration process can seem complicated. Therefore,
most of the organizations acquire the services of best
VAT consultancy in Dubai to comply with the process, without having to
face penalties.
2. Penalties
Associated with VAT Deregistration
Deregistering
VAT is another important process in the UAE. The business that does not
make enough supplies reaching the VAT payment limit have the responsibility of
deregistering themselves. The businesses are granted a period of twenty days to
follow the procedure.
In
the given time, they have to fulfill all the conditions and provide the
documentation and proof to deregister from it. On the other hand, the parties
failing to comply with the deregistration process have to face a penalty of AED
10,000.
3. Penalties over
Failing to Display Prices Inclusive of VAT
Displaying
the products or services in the superstores, markets, etc. with their prices is
a common practice. The businesses in the UAE are responsible for displaying the
price inclusive of the value-added tax.
It
is meant to keep the customers well informed about the highest possible amount
they have to pay. However, if the business fails to follow this practice and
cause confusion to the customers, they will have to pay a penalty of AED 15,000.
4. Penalties
over Failing to Issue Tax Invoice
The
final customer of any product or service is the main unit that has to pay the
value-added tax in the UAE. Therefore, the business authorities must maintain a
clear record of the tax invoices. The taxable person has to provide the record
on demand.
If
the taxable person fails to provide the record of the tax invoice, he/ she will
have to fulfill a penalty of AED 5000 for every missing tax invoice.
5. Penalties
over Voluntary Disclosure Form 211
Most
of the business authorities make mistakes in the VAT return. Such mistakes
cause issues for the authorities, making them put more effort and time in the
process. Therefore, they have placed the opportunity of filling the voluntary
disclosure form 211, to rectify the omissions and errors in the VAT return.
However,
keeping the process simple can make people negligent. So, the authorities have
also imposed a fine over it. There is a fixed penalty of 3000 AED and 5000 AED
for using the VAT disclosure form for the first and second time, respectively.
If you are not confident about complying with the process, you can acquire the
help of the best VAT consultancy in Dubai and fulfill the process without
facing any penalty or fine.
Comply With
VAT Law To Avoid Penalties!
Value-added
tax is implemented to provide a little relief to the business authorities, so
they can also make a profit. However, facing penalties and fines over
noncompliance issues can lower the ratio of their profits, as well as affect
their business reputation. So, consulting the experts and connecting with
professionals is one of the best choices to limit loss.
Pay
attention to your responsibility for tax payment and comply with the law to
maximize your profits.
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