Are you in the position of being confident that everything is compliant to the UAE VAT law and then suddenly get fined because of noncompliance; and it turns out that it is something so simple that could have been easily avoided?

There are in fact many VAT registered companies in the same position who believe all their processes and documents are VAT compliant with the UAE VAT rules and fined when audited by the FTA.

In our experience many violations are simple and often overlooked. This is a common error in interpreting the legislation and keeping updated with changes issued by the FTA.

Let us look at the “Price Display” as an example.  This may seem trivial right?

Whatever price you display, so long as it is the correct price of the goods and/or services it should be fine; but it may not be. Let’s look at a sample scenario to better understand the impact of proper price display when viewed under a spot audit.

Sample Scenario

Sample Beauty Clinic LLC is a lady’s salon and is VAT registered since 2018. The management has been keen on making sure that everyone in the company is VAT compliant especially its accounting personnel to avoid any issues and penalties.

However, during a spot visit by an FTA inspector, their sales invoice is checked and they are penalized for 15,000AED.

Sample Beauty Clinic is surprised, they have been raising their sales invoice according to the guidelines set by the FTA for a simple tax invoice.

The following information are clearly stated in their sales invoices:

• “Tax Invoice”
• Sample Beauty Clinic LLC’s Name, Address and TRN
• Customers Name
• Item Name and Description
• Net amount, VAT rate and Total amount

What went wrong?

According to the Federal Decree-Law on Value Added Tax, the advertised price for taxable supplies should be VAT inclusive.  

The only time prices can be displayed exclusive of VAT is when the taxable goods and/or services are intended for export and if the recipient is also a UAE VAT registered; and it should be clearly stated as “Exclusive of Tax”.

Companies who fail to comply will be subjected to an administrative penalty of 15,000AED.

This is just a sample of the many rules that are easily overlooked.

It is crucial for every VAT registered company to ensure that every detail of its processes and documents are being checked and implemented according to the UAE VAT rules and regulations to avoid violations and penalties.

Prevention

Companies can prevent this from happening through regular training to their employees in developing their knowledge of the UAE VAT laws. Ideally, you should seek for professional advice on how your processes and documents should be improved to ensure complete compliance with the UAE VAT Law.

Contact us

SimplySolved is an FTA approved Tax Agency and ISO certified company with over 100 clients. We provide reliable and quality VAT and accounting services to companies in the UAE.

If you want to learn more contact us at: 043445338 or Log on to : www.simplysolved.ae