VAT: tens of thousands of companies fail to register

About 260,000 companies have registered for VAT but tens of thousands of others are yet to do so – more than three weeks after the deadline passed.

Khalid Al Bustani, head of the Federal Tax Authority, yesterday urged businesses to get their affairs in order.

But he also suggested there would be leniency and said no date had yet been set for the issuing of fines.

Last week, the authority also said companies would be given a few months before they had to file their first tax returns to help ease the burden.

Mr Al Bustani could not say exactly how many companies were yet to register. Last year about 350,000 were estimated to be subject to VAT and had to register before December 4, 2017.

In addition to the 260,000, about 10,000 larger groups of companies have also registered. Online registration for VAT began last September.

“In some countries it takes them up to eight months to register, but with the way things have been going, we believe we will be done soon,” he said.

Mr Al Bustani said about 50,000 companies registered

on one day last month as the deadline loomed. When asked when the Dh20,000 fines would be issued, he said: “Our goal is not to fine companies, our goal now is to have everyone register. But whoever intentionally avoids registering will be subject to fines.”

Mr Al Bustani said the authority was being flexible and understood that some companies were genuinely not yet ready, but that there would be no amnesty period for intentional dodgers and tax evaders.

“In all the other countries that apply VAT, the taxation authority plays only an observatory role, but here the private sector is expecting us to be be a tax adviser,” he said.

“We have already done more than our role by providing awareness workshops and explaining the procedures in detail on the website.”

Last year, about 24,000 people went to workshops organised by the Ministry of Finance.

And the authority is in the process of introducing tourist tax refunds. The law already includes a clause on the refunds, but the process will take time, Mr Al Bustani said.

The authority has been in discussions with the big four international companies that operate the tax-refund process, and it will be starting to tender soon to decide which will take care of the procedure.

It has received 4,000 applications to register tax agents, 250 of which have been rejected, he said.

David Daly, a chartered accountant, said he knew of companies that had their registration forms rejected without a full explanation.

“I know of three entities that have been rejected for reasons of turnover. All believe that they will soon reach the minimum threshold for registration,” Mr Daly said, referring to the Dh375,000 limit.

“When the entities email the FTA they are not getting a response. Ringing doesn’t help as individual cases are not entertained, just queries on the law.”