This will ease reporting and compliance pressure on companies, especially SMEs.
The Federal Tax Authority (FTA) has relaxed the timeline for filing the first value-added tax (VAT) returns, easing reporting and compliance pressure on companies, especially SMEs.
“Earlier today, we have seen some relaxation by the FTA with respect to the VAT return period. The rule, which applies only to qualifying businesses, allows extending the accounting tax period from one to three months, according to the director general of the UAE’s Federal Tax Authority (FTA). The FTA has provided the first VAT return period from January 1 to May 31 and subsequently on a quarterly basis. This means the first return will need to be filed on or before June 28 and later returns from June 1 to August 31, September 1 to November 30, December 1 to February 28-29,”
All businesses must log onto the FTA’s website and check the tax period under their profile. The tax period for some businesses will, therefore, be four months, and five months for other businesses while businesses with a three-month tax period ending in March will not be affected by the amendments.
In order to ensure ease of business under VAT, the FTA has relaxed the timeline for filing the first VAT return which would enable many businesses to gear up for the time loss. Businesses can strive to be fully compliant in terms of reporting VAT obligations to authorities.
Earlier, the first tax return filing for companies with more than Dh150 million turnover was one month. For others, it was quarterly. Now, firms can file their first tax returns after four or five months in June as per the new timelines appearing on the FTA’s dashboard after log-in by a member company. Such an extension in filing returns shall help firms to better comply.
Most of the micro, small and medium enterprises have been granted five months, four months and so on as their filing period for the first return.
This will enable various entities to cope up with VAT implementation requirements and ensure they do not fall on the wrong side of the legal provisions.
Along with Saudi Arabia, the UAE levied five per cent VAT on goods and services as part of a GCC agreement.
Now, businesses need to acknowledge that VAT is a business change and not just an accounting change and accordingly utilize this time bonus to streamline all business functions as per the provisions of VAT to ensure business runs in line with policies.
The teething issues post January 1, 2018, on day-to-day compliance are slowly settling down.
The extension of the tax periods will give businesses additional time to identify the correct VAT treatment and make the necessary adjustments before the VAT return is due
The Federal Tax Authority have taken on board feedback and are keen to work together with the business community to help them be compliant with the VAT lawThe Federal Tax Authority have taken on board feedback and are keen to work together with the business community to help them be compliant with the VAT law
It is believed this relaxation is meant for clubs, charities and associations to make their first return filing easier. This relaxation benefits taxpayers and allows them more time to administer the business and structure processes to comply with regulations.
