Tips to avoid tax penalties in UAEKWSME
Due to its prime location that connects Europe, Africa, Asia, Russia and the Middle East, Dubai is one of the world’s biggest business hubs. In addition, UAE is slowly developing other cities such as Abu Dhabi into a similar business hub as well, that will further fuel economic growth. The country also has several free zones and mainland regions set up throughout the UAE to create even more economic activity and generate growth that is planned. The implementation of low tariff rates for import and export flow with foreign countries, in Dubai, has also played a huge part in attracting foreigners to the business hub.
Avoiding Tax Penalties in UAE
The implementation of the value-added tax (VAT) was made effective from 1st January, 2018, at the rate of five percent in the UAE. However, as the system is only a year old, it will take time for the businesses across UAE to become registered in the new system. Therefore, here are some tips to avoid tax penalties.
Firstly, value-added tax is required for the businesses that have had an annual turnover of or more than AED 375,000 or are expected to meet the specified turnover amount in the upcoming four weeks. Therefore, the best way for businesses to avoid tax penalties is to register for value-added tax in the given registration time-period. The time period specified for the application submission is 30 days after the turnover limit is achieved.
Another way to avoid tax penalties in Dubai is by keeping safe all transactional records. These records and will act as financial evidence which will help the authorities decide whether the business meets the value-added tax requirements or not. If the records are not kept updated, the act will be seen as noncompliance of law and can lead to tax penalties in Dubai. Using electronic accounting software’s is the best way for keeping the financial records safe.
Keeping the staff well trained by educating them about the new tax system and the rights of the organization will help erase queries about value-added tax. This will also help them prepare better for the new tax law.
Some suppliers in the priority sectors have been exempted by the FTA from tax. This means the specific goods suppliers are registered for value-added tax but at the rate of zero percent.
Value-added tax return is to be filed on a monthly basis by organizations if the annual turnover is over AED 150 million. For organizations with lower turnover rate, must file value-added tax return once every quarter of the year. With the value-added tax returns filed, penalties for tax can be avoided.
Finally, renegotiating contracts with VAT protection for suppliers will help avoid tax penalties. It will also keep the system updated according to that introduced by the government.
We are here to help
Managing a newly set up business can prove to be quite difficult for new business owners, entrepreneurs and foreigners working overseas. The actual business setup in Dubai, for inexperienced business owners, can be time consuming, considering they are not aware of the processes. Without the knowledge of the exact documentation and registration process for business setup in Dubai, right decisions cannot be taken. Therefore, companies have been formed to help these people start up their own businesses.
KWS Middle East is a company, that been set up in the UAE, that helps new business owners, local or foreigners, with their business setup in UAE. The company provides a detailed consultation through which it educates its clients about operating businesses, the markets and the process for business setup in UAE. Experts at the firm can then help their clients through the process of company formation Dubai, visa processing, opening bank accounts etc. With the aim of providing a time efficient and inexpensive company formation Dubai process, KWS Middle East provides the best team for their clients.
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