VAT laws and tax procedures are never the same, as you will witness new updates and amendments in the books. Regulatory bodies find it mandatory to update the overall infrastructure to ensure everyone is on the same page. Considering its significant impact on businesses, it is imperative for business owners to understand these changes and act accordingly. The UAE government has made a few changes to the UAE VAT laws, and business owners should know the consequences of not following these amendments. This post will reveal UAE VAT law amendments business owners must know. Keep scrolling to learn more!
UAE VAT law amendments:
UAE tax bodies and regulatory authorities have made a few changes to the VAT and tax landscapes. These amendments are not small, as they can impact your business if not followed. Business owners must keep an eye on these changes to ensure their business never face legal issues. VAT registration is not the only requirement; tracking the amendments is also necessary. Business entities should know about a few changes made in 2023. The list is given here!
1. Limits for tax credit notes:
Businesses often opt for a claim back in case of discounts, sales returns, sales cancellations, etc. The excess output tax charged on a tax invoice in prescribed times can be claimed back. However, keeping the time limit in mind is necessary, and the UAE government has issued a 14-day deadline for it. Suppliers must issue a tax credit note to the buyer, and they should reverse the proportionate input tax credit recovered on the original invoice.
If suppliers issue the tax credit note within 14 days, they could claim back the output tax. If 14 days are passed with no action from the supplier, VAT would be counted as a cost in the value chain.
2. Tax invoices are mandatory:
Business owners who received the amount as VAT after issuing a document were legally obliged to pay the amount to the FTA, even if it was not due. However, the provision has changed now! Any business owner who issues a tax invoice in respect of an amount must pay such an amount to the FTA.
Companies used to title their invoices as “tax invoices” even if no VAT was charged on the included items. The current provision has created ambiguity on tax liability, and business owners seek clarity. Understanding these statements is never easy unless you hire professional VAT registration companies in UAE for help!
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3. Invoices for importing goods:
Taxpayers were directed to receive and retain invoices for service imports on which reverse charge is usually applicable. However, the updated version of UAE VAT law also states that the direction is applicable for importing goods. Some taxpayers did not verify the integrity of import VAT payables, and the provision will clarify things further.
The Federal Tax Authority (FTA) always seeks to clean the environment. Therefore, the current amendment will ensure taxpayers about the credit received only for the verified imports. The taxpayer will undertake the verified import of goods, and the provision is more than helpful.
4. Mandatory voluntary disclosure:
The tax techniques are also being amended from 01/03/2023. Taxpayers could be required to submit a voluntary disclosure to correct mistakes or omissions even though such errors or omissions no longer bring about any exchange in net tax due stated in the unique VAT return.
This change should cover situations where a taxpayer omitted to report zero-rated materials, exempt elements, or import of products/offerings under the reverse price. Once a voluntary disclosure is submitted, penalties can also observe for the mistakes in the valid VAT returns.
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5. Reduced administrative penalties:
Administrative penalties used to be as high as 300% of the tax amount if there was a delay in tax payment. Business owners were never happy with this huge penalty. However, the current version has reduced the amount to 200% of the tax amount, a positive signal for business entities. The provision would be effective from 01/03/2023 onwards.
However, business owners should keep an eye on the threshold as FTA will never compromise on that amount. Do you think understanding these points is complex? Why not hire professional VAT consultants in Dubai and let these experts do everything for you? Your business will stay compliant with modern-day tax standards and regulations.
Enhance your business profile with VAT registration!
VAT registration could carry numerous advantages for businesses should they opt for it. Apart from trustworthiness, they can also reap tax advantages and returns occasionally. A VAT registration number will label your business as a legal and compliant entity. Without hiring VAT registration experts for your business, you will never understand the tax landscape. Allow them to enhance your business profile with VAT registration and prepare legal tax files for your company. Hire them today to enjoy a complete set of advantages!