Value-added tax (VAT) and excise tax compliance are now key areas in conducting business in the UAE. Ever since VAT came into effect in 2018 and excise tax rules were established, companies have had to adhere to strict tax compliance measures. Yet, a lot of companies continue to struggle with understanding and dealing with their VAT and excise responsibilities.
In this blog, we are going to discuss the prevalent VAT and excise problems faced by businesses in the UAE and how hiring a professional VAT & excise advisor in the UAE can minimize risks and maintain compliance.
1. Incorrect VAT and Excise Registration
Incorrect or incomplete tax registration is one of the most prevalent problems encountered by businesses.
- Incorrect Registration Details: Companies make mistakes while entering trade names, TRN numbers, or business activities.
- Failure to Register: Businesses above the compulsory VAT threshold (AED 375,000) but not registering are penalized.
- Late Registration: Late VAT or excise registration results in fines and legal issues.
A good VAT advisory service makes sure that businesses are registered and UAE tax compliant.
2. VAT and Excise Filing Mistakes
Mistakes in filing VAT and excise returns are a common issue. Errors can be:
- Miscalculation of VAT Input and Output Tax: Miscalculating VAT on purchases and sales incorrectly.
- Incorrect Tax Classification: Misclassifying taxable, exempt, and zero-rated goods and services.
- Omission of Transactions: Omitting to record transactions, resulting in incorrect returns.
Tax advisors assist businesses in making correct and timely returns, thereby avoiding penalties and legal complications.
3. Failure to Comply with Excise Tax Regulations
Excise tax is applicable on certain products like tobacco, sweetened drinks, energy drinks, and electronic smoking products. Most companies face:
- Incorrect Product Categorization: Categorizing products in the wrong excise category.
- Non-Reporting of Excise Liability: Some firms do not report their excise tax liability.
- Incorrect Pricing: NExcisetax is not included in product pricing, affecting profit margins.
Professional excise consulting services provide proper reporting and adherence to UAE rules.
4. VAT Recovery and Refund Issues
Companies usually encounter challenges in recovering VAT refunds, particularly if they do not have adequate documentation.
- Inadequate Documentation: Incomplete invoices, tax receipts, or supporting documents.
- Incorrect Refund Claims: Submitting incorrect refund claims results in delays or rejection.
- Complicated Refund Process: Going through the refund process without professional help takes time.
Engaging a VAT advisory company in the UAE guarantees correct refund applications and quicker processing.
5. Failure to Comply with UAE Tax Laws
UAE tax laws are continually changing; thus, it becomes very difficult for enterprises to remain in compliance.
- Absence of Awareness of Tax Legislation Changes: Companies tend to lag behind in updating themselves on recent regulations, thus failing to stay in compliance.
- Irregular Record-Keeping: Ineffective records make it difficult to meet auditing requirements.
- Appropriate VAT Accounting on Imports and Exports: Misinterpretation of international trade tax regulations.
A professional VAT and excise advisory service keeps businesses informed about regulatory changes and ensures full compliance.
Conclusion
Dealing with Vat & Excise Advisory In UAE can be complicated and tricky. From improper registrations to submission errors and refund matters, companies have to overcome many tax-associated obstacles. With the help of a professional VAT & excise advisor in UAE, such as RBS Auditors, businesses can attain complete compliance, escape penalties, and simplify their tax procedures.
Reach out to RBS Auditors today for expert VAT and excise advisory services!
