BEWARE, VAT EVADERS
dubai — Come May and the Federal Tax Authority (FTA) will get tough on those companies which are obliged to register for valueadded tax (VAT) but have not done so yet, said a senior official.
Khalid Ali Al Bustani, directorgeneral, FTA, said during a media briefing on Wednesday that the penalty for late registration was postponed till April 30 to get companies who had not registered yet on board.
“Beyond this period, there will be no reason for the companies to not register and they will be subject to several penalties. We are also working with economic departments to arrange road shows to help these [non-registered] companies register. Beyond that, we will apply our role for auditing the companies and exchange information with other regulators to know which firms have not registered for VAT yet,” he said.
“They [companies] need to be prepared to have records audited. We are asking for voluntary submission now… We will not tolerate tax evaders. Since companies have enough time to understand the law, there is a certain limit after which the FTA has to take action. So far, the FTA gave this time
We are asking for voluntary submission now… We will not tolerate tax evaders Khalid Ali Al Bustani, Director-general, FTA
to businesses to adjust their systems. We are having a road show in April and there is nothing after that,” he warned.
He pointed out that there would be several penalties, for example, Dh20,000 for late registration, another penalty for late payment, a fine for not submitting returns and conducting business without VAT registration. As many as 275,000 companies and individuals had registered for VAT upon completion of 100 days. The VAT compliance ratio was 98.8 per cent, one of the highest in the world, the authority said.
“We had 2 cycles of compliance and submitting returns where we achieved 98.8 per cent compliance. So far, 275,000 companies have registered. Overall, there has been good compliance for VAT registration,” Al Bustani said. He added that large entities had submitted their tax returns.
Upon the completion of 100 days, 14,402 companies were asked to resubmit their applications while 2,160 applications are currently pending now with the tax authority. As many as 77 tax agents passed the FTA exam while 21 are currently registered. The remaining 56 are currently completing registration requirements.
According to the FTA, approximately 100,000 telephone calls were answered during the first 100 days, averaging 1,123 calls per day while 70,000 e-mail queries were answered during the 100 days, averaging 787 e-mails per day.
New tax-paying mechanism
In order to make tax payments easier for companies and individuals, the FTA said that in addition to e-dirham, companies can also pay tax through direct debit and GIBAN transfer from any exchange houses or banks.
“This month, about 80,000 companies are expected to submit their VAT returns and most of them are small and medium enterprises. These companies need to understand that they have to submit VAT returns before deadline to avoid penalties and not to wait till the last minute. Companies wait till 28th to pay VAT returns. Legally, it is the last date. It doesn’t mean that this is the date to submit returns. When companies do that at the last minute, sometimes payment is not received which means they are delayed, so they are subjected to penalty. Plus, they might have technical issues when submitting returns so they need to plan in advance,” Al Bustani said.
The FTA director-general said there are a large number of companies that are not registered yet. However, he refused to disclose the number of companies the FTA expects to register.
“By now, everyone is aware of VAT. It is in everyone’s knowledge that there is VAT in the UAE. Hence, it is an obligation on those companies who reach over Dh375,000 threshold to register for VAT. They are violating the law if they are not registering,” Al Bustani warned.
He pointed out that the postponement of penalty doesn’t mean that these companies are not obliged to register for VAT. “They are obliged to register from January 1 and pay VAT and declare amount from January 1. They are obliged to comply with the law.”
Tourist refund
Al Bustani noted that the Authority is working for tourist refund and the aim is to implement the best system in the world.
“We issued a tender and now we are in the final stages. We are waiting for final approval to finalise the contract for the tourist refund operator.”
Commenting on the impact of VAT’s cost on goods, he said micro data of the UAE showed there was no big increase in inflation due to VAT. “Different sectors have witnessed normal growth as expected.”
John Peacock, head of indirect tax and conveyancing BSA Ahmad Bin Hezeem & Associates LLP, said during a workshop hosted by Dubai Chamber that the impact of VAT cannot be underestimated.
“A business could experience significant losses in the event of ignorance of the law and procedures of VAT administration,” he said.
— waheedabbas@khaleejtimes.com