Mistakes to look out for by SME’s while filing VAT
The United Arab Emirates has been a fairly new addition to the list of countries that have implemented Value Added Tax (VAT). The government of the UAE has also introduced many laws and regulations which have drastically improved the number of business opportunities one can avail in the country. this has led to a number of companies both big and small to come to the country.
The increase in the number of Small and Medium Enterprises (SMEs) which have come to the country has also led to an increase in the mistakes which are made by these enterprises during VAT filing. The rules and regulations of the UAE state that different penalties and fines can be levied if mistakes are made during VAT filing.
Given below are some of the mistakes which SMEs should avoid in the UAE:
- Not Maintaining the Important Records of the Company
It is the duty of the management of the company to prepare and maintain all the important records of the business. It is also deemed mandatory by the Federal Tax Authority (FTA) to keep all the records of the transactions made by the company. Such records should be maintained at least for the last five years. for real estate companies, the durations to maintain all the records is fifteen years.
- Calculations Mistakes
If the management does not have qualified and expert people who will file the VAT for the company, people are bound to make mistakes. It is recommended that a company should avail services from a professional to deals with VAT Filings.
- Inadequate and Poor Planning
Planning is an important part of the business. Before filing VAT, the management should think the complete process through. This will allow the management to make any preparations necessary for the time of VAT filing. The management will also be able to make any transactions or buy new infrastructure or machinery after proper planning.
- Utilizing Wrong Resources for the Job
If the management utilizes inadequate or wrong types of resources for managing and filing VAT, then some mistakes will be made which will ultimately result in fines and penalty for the business.
- Invalid Tax Invoices
Tax invoices of a company which are utilized for VAT filing should be Valid and usable as it assists in the formation of a basis for the liability for VAT. It will also allow the VAT registered customers to reclaim the Vat which has been charged.
- Not having the Proper Understanding of how VAT works
If the management hires people which do not have the proper knowledge of how the VAT works and what steps should be taken by the management to make the most of the Value Added Tax, they are bound to make mistakes while filing. To combat this problem, the government of the UAE has issued many documents and videos so that the smaller SMEs face no problem during the process.
- Improper Timing of VAT Filing
Timing is the key while filing Vat. Most of the problem is caused to the businesses when the VAT is filed at times that are either wrong or are filed after the due date provided by the authority. This leads to many penalties and fines. The management should take care that they follow the proper time frame and guidelines to avoid any kind of punishment.
These are some of the mistakes which are made by the Small and Medium Enterprises while filing for VAT. Such mistakes can affect the working of a company in a negative way and will also hamper the allocated budget of the business.
The management should utilize the services of professionals and expert who know what are they doing. If you want the services of such experts for your business in the UAE, then JAXA Chartered Accountants can help you in this matter.
JAXA Chartered Accountants consists of experts and professionals who will understand the requirement of your business and will provide services which will help the business become more profitable and efficient. If you want to know more about the services of JAXA Chartered Accountants then feel free to Contact Us. We will be happy to assist you in your business journey,
Read more about VAT in Dubai
VAT Accounting Services in Dubai
VAT Registration Services in Dubai
How to Register your Company for VAT?
How Can You Prepare For VAT In UAE?
Basic Requirements of VAT Registration in UAE
VAT Deregistration Services in Dubai
VAT Consultancy Services in Dubai
VAT Rates for Different Industries in the UAE
