Filing VAT returns with the Federal Tax Authority (FTA) is a crucial task for all VAT-registered firms. However, you must exercise extreme caution when filing VAT returns, as simple errors are common in this process. It is preferable to seek the assistance of VAT consultants in Dubai.
In this post, we’ll go over the most common mistakes businesses make while doing VAT filing in Dubai, which can lead to fines.
- Making the Error of Registering Sales in the Wrong Emirate
When completing VAT returns in the UAE, most firms make the mistake of entering sales in the wrong emirate. When business owners categorize their standard rated sales based on the customer’s location, they make this mistake.
- Forgetting to Include Exempt and Zero-rated Sales
Most businesses correctly complete their output and input VAT returns, but they overlook zero-rated and exempt sales. It is a common misconception among business owners that only standard-rated transactions must be reported in UAE VAT filings.
- Claiming Return on Expenses That Aren’t Allowable
On a daily basis, every business incurs certain standard expenses. The UAE VAT Law, on the other hand, does not allow taxable persons to recover VAT on specified expenses. Many businesses, however, make the terrible mistake of claiming expenses that are not allowed due to a lack of information.
- Failing to Account for Reverse Charge Mechanism
Businesses must account for Reverse Charge Mechanism (RCM) while importing goods or services into the UAE. In normal transactions, the supplier supplies goods and collects VAT on behalf of the customers, which will be later paid to the government. The VAT on imported commodities is not required to be paid by the provider under RCM. RCM requires the buyer or final consumer to pay the tax directly to the government. Many businesses in the UAE fail to account for RCM when completing VAT returns because they are unaware of the law.
- Errors in the VAT calculation
The application of the correct VAT rates is the most critical aspect of filing accurate VAT returns. Businesses, on the other hand, make mistakes in determining the applicable VAT rate for goods and services, resulting in larger errors in calculations and payments, which may result in penalties.
- Using adjustment columns incorrectly
Businesses are confused about how adjustment columns are used in the VAT return filing procedure. The goal of include an adjustment column is to account for bad debts or changes coming from commercial real estate sales. Businesses, on the other hand, frequently use the adjustment columns to repair errors in previously submitted VAT returns. This causes a shift in the figures, which could lead to additional FTA inquiry and investigation, as well as penalties.
What role do VAT consultants in Dubai play?
You can use VAT consultants in Dubai to ensure an error-free VAT return filing process. A VAT specialist may assist you in two ways with their VAT services in UAE. To begin, we can teach your workers how to file VAT returns in the United Arab Emirates. We can also file your UAE VAT returns on your behalf. Furthermore, with our help, you will always be ready for any unexpected upgrades or changes in FTA laws. It also includes preparation for an unanticipated FTA audit.