Avoiding Typical Mistakes: Best Practices For VAT Filing In The UAE

Filing Value Added Tax (VAT)  is a significant aspect of compliance, and avoiding common mistakes is essential to prevent penalties and legal discussions with the Federal Tax Authority. Some of the typical mistakes to avoid when filing VAT in UAE include Late Filing, calculation errors, incorrect input tax claims, failure to include zero-rated and exempt sales, and not maintaining proper records. Businesses must understand and comply with VAT regulations to ensure accurate and timely filing of VAT returns, thereby avoiding potential financial and legal repercussions.

VAT Return Filling:

VAT Return Filing refers to the process of submitting your Value Added Tax returns to the relevant tax authorities. It provides accurate information about your taxable sales, purchases, and the amount of VAT due or refundable. It is important to ensure timely and accurate VAT return filing to comply with tax obligations and avoid any penalties or fines.

Common Mistakes to Avoid:

When it comes to VAT-filling, there are a few common mistakes you’ll want to avoid. Here are some common mistakes that you have to avoid:

Late Filing: 

Failing to submit VAT returns on time can lead to penalties. The last date for filing VAT returns is the 28th day following the end of the tax period. When filing your tax return, it’s important to avoid common mistakes, especially if you’re filing late. Common mistakes to be avoided include missed deadlines, incomplete or inaccurate data, and staying uninformed about regulatory updates to prevent penalties and compliance issues.

Calculation Errors: 

Mistakes in computing the accountable taxes can result in non-compliance. Businesses need to adopt a well-integrated and systemized procedure to ensure accurate tax calculations. To avoid these errors, businesses must maintain up-to-date records, file VAT returns on or before the last date, and get help from tax consultants for assistance.

Incorrect Input Tax Claims:

Claiming VAT return on ineligible expenses can lead to disputes with the tax authorities. Inaccurate or unsupported VAT in UAE claims may come from different sources, including accidental errors in documentation, misinterpretation of complex tax regulations, or, in some cases, calculated attempts to manipulate financial records for financial gain. 

Failure to Include Zero-rated and Exempt Sales:

Forgetting to include zero-rated and exempt sales in the VAT return can result in inaccurate reporting and potential penalties. It is important to include all eligible goods sold in the specific period and with an accurate sale value of all eligible goods sold in the fixed time.

Not Maintaining Proper Records:

Insufficient record-keeping of sales, purchases, imports, and exports can lead to difficulties in filing VAT returns accurately. Not maintaining proper records can have serious consequences for individuals and organizations alike. Without proper and up-to-date records, it can be difficult to make well-informed decisions, track progress, and ensure compliance with legal and regulatory requirements.

Best Practices for VAT Filing in the UAE:

VAT filing in the UAE is made simple learn the best practices to ensure smooth and accurate tax submissions, keeping you in good standing with the authorities.

Timely Filing: 

Ensure that VAT returns are filed on or before the due date to avoid penalties. Timely filing of returns is mandatory in the UAE for all persons registered with FTA, and returns must be submitted within 28 days from the end of the tax period. It is also compulsory to keep records for 5 years and cooperate with the FTA in the event of an audit. Taking the help of VAT consultants can ensure accurate and timely VAT filing in the UAE, reduce compliance risks, and maintain a good standard.

Accurate Calculations: 

Implement a strong system for tax calculations to reduce the risk of errors.it is essential to ensure accurate calculations to comply with tax regulations. It consists of correctly determining the input and output VAT, as well as calculating the net VAT  payable. 

Comprehensive Record-Keeping: 

Maintain up-to-date records of all business transactions, including sales, purchases, imports, and exports, to support accurate VAT return filing. All VAT-registered businesses must keep and keep safe certain records and accounts within functional cooperated software for at least six years. Maintaining accurate records is important to make sure that businesses pay the correct amount of VAT and avoid penalties.

Review and Reconciliation:

Regularly review and reconcile VAT records to recognize and rectify any discrepancies. During the review process, all VAT in UAE  transactions are carefully examined to identify any errors or inconsistencies. It may include comparing the input and output VAT, as well as verifying the accuracy of the data.

Seek Professional Advice:

Consult with a qualified tax advisor or VAT consultant to ensure compliance with VAT regulations and to address any filing-related queries.VAT regulations can be complex and confusing, and making mistakes can result in penalties and fines. By consulting with a professional, you can ensure that you are filling out your VAT returns correctly and in compliance with all relevant laws and regulations. 

How can BRISK help you to avoid these mistakes?

BRISK helps to avoid these mistakes. It simplifies and automates the entire process, making sure you stay compliant and error-free. With BRISK, you can easily track your sales, expenses, and VAT liabilities, and it will generate accurate reports for you. So, say goodbye to calculation errors, and welcome to hassle-free VAT filling with BRISK!