Managing VAT Compliance in UAE for Small Businesses

In order to ensure effective implementation of the VAT regime and avoid Tax evasion by the taxpayers, various compliances requirement are being imposed on the taxpayers. Many small business entities are worried about the implementation of the value-added tax on their enterprise. After obtaining the registration under the new regime businesses in the UAE will have to make themselves fully compliant with the VAT legislation by the time the tax enters into force. The small businesses entities are required to undertake the activities like charging VAT, recording all financial transactions accurately and maintaining up to date financial records. The VAT tax returns should be filed with the FTA within 28 days after the end of the tax period, which will be specified in the VAT legislation, and can be filed online. In order to manage the VAT compliance in UAE the small business can undertake following steps-

Understanding the whole system

In order to accurately manage the system, it is very crucial for the business unit to completely under the system of the VAT. As failure to comply with any of the provision will of value-added attract a significant amount of penalty. The small business units can seek professional help in order to gain the better understanding of the new regime.

Developing a Plan

VAT compliances can be managed by the small business entities by developing an appropriate plan with regard to handling the compliances requirement. A plan shall be made to evaluate the impact of VAT on the multiple fronts of the business entity.

Registration

All the business entities whose annual turnover exceeds the threshold limit of AED 375,000 are mandatorily required to obtain GST registration. However, the business entities whose annual turnover is less than the threshold limit but above AED 187500 can obtain registration voluntarily. The business entities whose annual turnover exceeds the threshold limit are can acquire GST registration.

Keeping Record

In order to comply with the various provisions of the VAT like filing returns, the business entities are recommended to keep accurate records of all the transactions undertaken. Also, it is mandatory for all the business entities to keep the business records for a time period of 6 years just in case the regulatory authorities are to conduct an investigation on the business.

Providing Training to the staff

In order to efficiently comply with the provisions of VAT regime every small business entity is required to impart the knowledge of VAT among its staff. It is essential to train the staff about the implications of VAT especially in the UAE is important as this would be a new concept for people who live and work locally. The trained staff will be able to understand the various concepts and terminologies of the VAT regime in the better manner. Further, they will also need to ensure adequate record keeping and make sure and that appropriate goods and services have the VAT marked up and that the correct documentation is collected also.