The Value Added Tax (VAT) is a consumption tax that is applied to most services and goods sold in the UAE. Businesses that are registered for VAT are needed to file VAT returns on a quarterly and monthly basis.
Filling VAT returns can be a difficult process, and there are a number of common mistakes that businesses make. In this blog post, we will discuss some of the most common mistakes to avoid when filling out VAT returns in the UAE.
Filing Your Return Late
One of the most common mistakes that businesses make is filing their VAT returns late. The deadline for filing VAT returns is the 28th day of the month following the end of the tax period in Dubai. For example, if your tax period is for the month of January, your VAT return is due on 28 February.
If your file your VAT return late, you will be subject to a penalty. The penalty for late filing is 5% of the amount of the amount of VAT that you owe.
Making Incorrect Calculations
Another common mistake that businesses make is making incorrect calculations on their VAT returns. This can happen for a number of reasons, such as:
- Using the wrong tax rate
- Not including all of the relevant transaction
- Making errors in the calculations
If you make incorrect calculations on your VAT returns, you may have to pay back the difference to the tax authorities. You may also be subject to punishment or a penalty.
Not Keeping Proper Records
Businesses that are registered for VAT are required to keep proper records of all of their VAT transactions. This includes records of the services and goods that you have sold, the amount of VAT that you have collected, and the amount of VAT that you have paid.
If you do not keep proper records, you may have difficulty filling your VAT returns properly.
In the United Arab Emirates, businesses must register for VAT if they meet certain requirements. These requirements include:
Selling goods or services that are subject to VAT Selling a turnover of more than AED 375,000 per year If you are required to register for VAT but do not do so, you may be subject to a penalty.
Not declaring all of your taxable supplies on your VAT returns Businesses that are registered for VAT must declare all of their taxable supplies. This includes both supplies produced within the United Arab Emirates and supplies produced outside of the UAE.
There may be a penalty if you do not declare all of your taxable supplies.
Conclusion
Although filing VAT returns in the United Arab Emirates can be difficult, it is essential to avoid these common blunders. You can contribute to the timely and accurate filing of your VAT returns by following the advice in this blog post.
dA qualified tax advisor should be consulted if you have any questions about VAT filing in the UAE.
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