The VAT was introduced in the UAE on January 1, 2018, and business is slowly beginning to fully understand how it will affect them. If your enterprise has not registered and you have no VAT registration number in the UAE after VAT rollout then it is potentially open to fines in addition to encountering some compliance issues.
Under the VAT legislation, registration is mandatory for all businesses with taxable supplies worth more than AED 375,000.
Similarly, businesses with taxable supplies worth more than AED 187,500 and under the mandatory registration threshold of AED 375,000 may opt for voluntary registration for VAT.
A VAT tax number lies at the heart of the new VAT system. If a business has no VAT registration number in the UAE after VAT’s introduction, it means a business cannot charge customers for the VAT amount due. As that VAT still remains payable to the government, the business becomes liable for the foregone VAT.
Similarly, an enterprise that has no VAT registration number in the UAE cannot claim back any VAT paid to suppliers as it has no tax number. Hence, an unregistered company is both liable for any VAT payable to the government and unable to claim back any VAT paid.
Moreover, an enterprise that has not registered and no VAT registration number in the UAE after VAT went live places an enterprise in breach of its VAT reporting obligations.
According to VAT legislation, VAT-registered businesses are required to file VAT returns consistently with Federal Tax Authority on a quarterly basis. To simplify the process, all VAT returns filings can be made online through the e-Services portal implemented by the UAE government.
Failure to file a VAT return on a timely basis may also attract an additional fine or a penalty.
No VAT Registration Number In The UAE?
Together with its compliance issues, enterprises which met the mandatory revenue threshold for VAT registration who have no VAT registration number in the UAE may find themselves liable for penalties and fines for non-compliance.
An integral part of the framework the UAE government is a strong VAT compliance monitoring system. This legislation comes with stiff penalties for non-compliance. Any business assessing the likely costs of setting up their VAT compliance needs to understand that there is a very real cost for non-compliance.
Penalties For Non-Compliance
A Cabinet decision set VAT non-compliance fines at a minimum of Dh 500 and up to triple the value of the tax on the transaction in question.
Business failing to keep the required records and other information specified in the tax laws, the business will be fined Dh 10,000 for a first offence and Dh 50,000 for a repeat offence.
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If your business is not registered and has no VAT registration number in the UAE after VAT went live on January 1, 2018, it brings with it a world of complications. From being obliged to pay VAT due to the government to not being able to claim VAT paid to suppliers through to potential penalties and fines for non-compliance, failing to register for a VAT registration number leaves your business open to a host of potentially expensive and distracting complications.