- July 8, 2020
- Posted by: admin
- Category: Uncategorized
Is your business VAT-ready? In 2018, the government had declared VAT implementation but many enterprises are still confused about VAT compliance and want to know more in this connection. VAT compliance has been made much simpler for the business community. Here are the necessary points that clarify, what your business is required to do for VAT compliance.
VAT compliance is vital
VAT compliance for businesses is vital and according to the VAT regulations, a company should compulsorily get registered for VAT, if the annual turnover exceeds AED 375,000. And if the turnover is any figure between AED 187,500 and AED 375,000, then it’s optional for the company to get registered under the VAT law and regulations. And if the annual turnover is less than AED 187,500, the company is exempted from this law. And for the start-ups, if the expenses that attract VAT exceed AED 187,500 , then the company needs to be registered under the VAT law. Many companies offer their services for the VAT consultancy and a business house can engage them for help.
The companies meeting the minimum turnover criteria need to get registered with the government for the VAT. Different unique tax payer registration numbers are allotted to all the different companies registered under the VAT law. Companies having the annual revenue of 3.7 million dirham should get registered as they’re taxable according to the law. Companies with yearly turnover between 1.87 million dirham and 3.75 million dirham have the option to get registered in phase one or later.
Maintain proper financial records
Each and every company is required to maintain proper financial statements and transactional records. It’s the responsibility of the respective individual entities to ensure that the maintained financial records are reliable, accurate, trustworthy and updated. These records will serve as the pieces of evidence. These records help to identify, if the firm is meeting the minimum annual revenue requirement for the registration. According to the government, it’s mandatory for every firm to maintain the financial records, even if the company is not VAT-eligible.
Filing of periodic tax return
The registered entities will have the right to claim tax credits on all the business related services and the purchased goods. The companies are needed to prepare formal tax returns on regular intervals. The businesses will also required to collect VAT on all the taxable goods and services offered by them.
TO do list for business entities
Get registered, if the company is VAT-eligible.
Ensure that accounts books are verified, updated and reliable.
Collection of VAT in the raised invoices
Keeping records of the paid VAT on the invoices to avail credit
Filing VAT returns in a timely manner