Posted on Oct 29, 2017
The deadlines for the VAT registration in the UAE has been announced by the UAE Federal Tax Authority (FTA), but the more concerning question is that whether the businesses of GCC nations and UAE, in particular, are fully optimized and ready for the VAT implementation or not? All the surveys done by leading financial auditors suggest the otherwise as according to their surveys, almost majority of the businesses are yet to initiate the process of VAT implementation.
The VAT will soon be imposed on all goods and services from the dawn of new year i.e. January 1st, 2018 but businesses need to apply for registration prior to that and taking that into consideration The FTA UAE, has announced the deadlines for VAT registration. They have segregated businesses on the basis of their turnover. Companies with an annual revenue of more than AED 150m need to apply for registration before October 31, 2017, and businesses with a revenue exceeding AED 10m should apply till November 30, 2017. Rest of the business entities should submit their application before December 04, 2017 in order to avoid the deadlines and pay penalty for it.
In a shocking survey result by the leading financial institution, the majority of companies in the GCC have not started any preparations for the implementation of value added tax (VAT) which will take effect from January 1, 2018. According to experts and industry insiders, Bahrain and other Gulf countries are more probable to miss a January 2018 deadline to introduce Value Added Tax (VAT).
Analysts also predict that it will a challenge for businesses to file tax returns, either monthly, bimonthly, or quarterly.
The shocking result of the survey also highlighted that nearly 60 percent of respondents feel very well-informed about the introduction of the VAT, whereas only a quarter of respondents felt well-informed in the previous survey launched in April. This shows an increase of 33.1 percent of respondents who fall into the category of very well informed, indicating a boosted awareness of VAT among businesses in the GCC.
It depends a lot on the implementation of the law thus tax experts have warned that VAT comes at a cost and exposure to heavy penalty if not administered correctly. Traders and companies whose primary focus will be to recover VAT from the customers will need to factor in the potential negative cash flow impacts that their business will be exposed to for VAT defaults as well as the likely additional scrutiny their books and records will be subject to by the tax authorities.