In the present post pandemic competitive business landscape, assuring tax compliance is of utmost importance for most growing UAE businesses. With newly introduced regulations and altercating changes in the tax laws, it’s imperative for companies to stay up-to-date with the latest FTA updates to avoid any potential fines or penalizations.
When discussing tax compliance for most UAE businesses for the year ahead it’s essential to harness all necessary information to help you stay compliant.
Understanding Tax Compliance in the UAE
The UAE was known for its erstwhile tax-free environment, but that’s unfortunately no longer the case.
In 2018, the UAE historically introduced the Value Added Tax (VAT) system, and businesses with an annual turnover of AED 375,000 or more are legally required to register for VAT. It’s important to note that businesses failing to register for VAT could irrevocably face hefty penalizations and fines.
Apart from VAT, there are other taxes that businesses also need to be aware of, such as excise tax and corporate tax.
Excise tax is specifically levied on non essential goods that are deemed harmful to human health or the environment, such as tobacco, energy drinks, and carbonated drinks.
Preparing for Tax Compliance
To prepare for complete tax compliance, all businesses must keep a few things in mind. Firstly, ensure their accounting systems are up-to-date and can manage filing in the new tax laws. Secondly, most eligible businesses should register for VAT as soon as possible to avoid any potential fines or penalizations.
Thirdly, all businesses should upkeep accurate digital records of all their transactions, including invoices, sales, purchases, and expenses.
Complying with Tax Regulations
Complying with tax regulations can often be a dismaying task, but it’s highly essential and unavoidable for most businesses to uninvite potential penalizations or fines. Here are some useful tips that help most businesses stay fully compliant:
1. Accurate Record-keeping:
As mentioned earlier, businesses should unfailingly keep accurate digital records of all their transactions. This includes sales invoices, purchase invoices, and receipts.
2. Submit Timely Tax Returns:
Businesses must ensure that they submit their tax returns on time to avoid incurring any additional late payment fees.
3. Update Accounting Systems:
Businesses should update their accounting systems to assure that they can well manage the new tax laws.
4. Consult Tax Experts:
Businesses should consult with registered vat experts in UAE to fully ensure that they are well complying with all the necessitated regulations.
Conclusively, tax compliance is of primal importance for most UAE businesses. With the new regulations settling in and the rapid action changes in the country’s tax laws over the recent years, has made it crucial for all companies to stay up-to-date with the latest FTA updates to avoid incurring any unwarranted potential fines or penalties.
To prepare for a complete tax compliance, all businesses should ensure their accounting systems are up-to-date and can well manage the newly inducted tax laws, by registering for VAT as soon as possible, and keeping accurate records of all transactions unfailingly.