Al Dhaheri Jones & Clark outline several business benefits for voluntary registration of VAT
As the date for the implementation of value-added-tax (VAT) draws closer, tax specialists suggest that businesses can register voluntarily if the total value of their taxable supplies exceeds Dh187, 500 or if the business expects to exceed that threshold in the coming days.
“Although VAT registration is required by businesses with a taxable turnover above the threshold, it is recommended to voluntarily register your business for VAT. There are several business benefits in doing so,” said Mohammed Fathy, General Manager of Dubai-based consultancy, Al Dhaheri Jones & Clark.
Al Dhaheri Jones & Clark is a consultancy firm, established recently in Dubai UAE. The company renders services as auditors, financial and accounting experts as well as advisors and consultants for specialised financial services.
“Voluntary VAT registration will not only help businesses avoid financial penalties, but also boost the business profile, ease business dealings, attain a voluntary VAT registration number, which will instill faith in business and help claim funds,” added Mohammed Fathy.
As per the Federal Tax Authority (FTA) in the UAE, businesses with an annual turnover of Dh375,000 must go for online registration through the authority's website ahead of the new levy in January 2018. Additionally, voluntary registration is also being encouraged for small businesses.
“Voluntarily registration for VAT requires businesses to abide by the same rules as any other VAT registered business. Hence businesses should maintain proper records, invoices and submit a VAT return every quarter. Once a business is VAT registered it can charge VAT on goods and services sold to customers and also reclaim VAT charged on goods and services purchased for the business from other businesses, suppliers, etc. VAT registration is therefore an important part of small business,” said Mohammed Fathy.
“As Vat experts, our team of tax specialists at Al Dhaheri Jones & Clark is well equipped to help businesses in structuring the finances, and also ensure that the company doesn’t incur any penalties from non-compliance or improper compliance. As such, we encourage businesses in the UAE to turn to expert services to align the reporting and compliance requirements by the government,” concluded Mohammed Fathy.
GCC states have agreed to implement VAT, which will generate billions in tax proceeds every year. The new tax, which is part of a move to diversify the country's revenue sources, is likely to generate Dh12 billion income in its first year of introduction, and may collect up to Dh20 billion in 2019. VAT is one of the most common types of consumption tax found throughout the supply chain, and is implemented in over 150 countries by governments around the world through businesses who act as intermediaries to collect it.
Intended to help improve the economic base of the country, VAT in the UAE will contribute to the continued provision of high quality public services into the future. It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.