Businesses must comply with VAT

Businesses across the UAE must comply with the value added tax (VAT) law by filing their returns on time, experts at a session on VAT returns and reporting stressed.

Organised by the Institute of Chartered Accountants of India (ICAI) Dubai Chapter, the session provided clarity on the process of filing returns, as well as registration for businesses that have not done so yet.

"In the beginning it was challenging for the businesses to register for VAT, as it was new for everyone," said Naveen Sharma, chairman, ICAI Dubai Chapter. "But, with time and clarifications from the Federal Tax Authority (FTA), the businesses started getting their doubts cleared which helped them in the registration process. I think, as of now, all big organisations have already registered for VAT, but some small businesses in the market are still struggling with registration process. In due time, I think they will also be able to register themselves."

Asked about how clear businesses are on filing returns, Sharma said that the VAT return form is very clear. "Guidelines issued by the FTA helped a lot in getting the clarity. But, businesses are facing some difficulties like getting the right invoices on time, reports from the system, etc. In due time and experience, I feel these issues will be resolved and businesses will get comfortable with VAT concepts and returns."

Similarly, Mansoor Sarwar, regional director of Technical and Pre-Sales at Sage Middle East, noted that larger corporations and multinationals have handled VAT-implementation well, as they prepared well in advance. "It is the small and medium businesses who are finding the process overwhelming. The majority of smaller companies we have spoken to are only somewhat prepared or are not prepared at all for VAT. A lot of them are still uncertain about how to get their accounting and business systems ready, and have not gotten their employees trained for VAT-compliance."

The learning curve, he said, is steep for a lot of small and medium companies, especially with regards to how to returns-filing, refund claims or how to conduct tax audits. "The simplest solution is to implement an internationally-recognised accounting software which is VAT-compliant. Find a software provider with prior VAT-implementation experience. Companies should also use a registered tax agent for support during this transition. Lastly, it is important that businesses remain proactive when it comes to VAT, and take the necessary steps to be ready."

Asif Master, director of Finance at Al Shirawi Group, added that the FTA has recently waived administrative penalties for non-registration till April 30, 2017. "We feel that it has been done so that those businesses who are left behind can catch up with the VAT registration. It is a welcome and positive move by the FTA to consider the difficulties being faced by the small and medium size businesses. Due to lack of preparedness and time many business could not register well within timeline."

"We recommend all the businesses to read the return filing guide released by the FTA," he added. "It is a nice and detailed document which explains what should be reported in each field of the return. Key is to check if all your transactions which took place during the month are properly captured and reported in the return. Export and exempt supplies are tracked separately and reported in the return. In case of imports, whatever is not included in the auto populated value in the FTA return, ensure you report it in the adjustment columns. Input credit should be claimed only which is allowed as per the rules in the return."

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