UAE sees 98% VAT compliance but many firms yet to register

Federal Tax Authority chief warns that action will be taken against those who have yet to register
Khalid Ali Al Bustani, the director general of the UAE’s Federal Tax Authority.
By Bernd Debusmann Jr
Wed 11 Apr 2018 02:41 PM

About 275,000 companies and individuals have registered to pay value-added tax (VAT) in the 100 days since its implementation on January 1, according to Khalid Ali Al Bustani, the director general of the UAE’s Federal Tax Authority (FTA).

Al Bustani added that despite some companies having so far failed to register – either intentionally or accidently – the VAT compliance ratio remained high, at 98.8 percent.

“Even though the UAE is new to the tax system, achieving that level of compliance reflects how advanced the UAE is,” he said. “They were ready for the implementation of VAT.”

He added that 2,160 VAT applications remain pending and that 14,402 firms were forced to re-submit their applications “due to missing information, or information not submitted correctly” before they can be approved by FTA officials.

Speaking to reporters on Wednesday, Al Bustani added that the FTA believes that “there are a large number of companies who have not registered yet”, some of which may have failed to do so unintentionally. He declined, however, to speculate on the number of companies who haven’t registered, saying that it is up to each company that meets the threshold for VAT to apply.

“It’s an obligation to register,” he added. "They are violating the law if they don’t.”

Previously, the FTA postponed penalties for not registering until April to give companies time to prepare them. According to Al Bustani, however, these companies are still expected to register and pay the required VAT amounts since January 1.

“Postponement does not mean they are not obliged,” he said. “Those who have not registered are tax evaders. We will take necessary actions.”

He added that registered companies should be prepared for audits to ensure compliance with the UAE’s VAT regulations.

“The law is very clear,” he said. “Their [companies who are not compliant] continuity is threatened.”

Al Bustani added that the FTA is planning a roadshow with various departments of economic development and municipalities around the UAE “to help companies with technical issues [about] how to register.”

Additionally, he said that the FTA is in the final stages of a tender to select a company that will process tourist VAT refund.

According to Al Bustani, the FTA has answered approximately 100,000 phone calls during the first 100 days of VAT, averaging about 1,123 calls per day, in addition to 70,000 e-mail queries.

He noted, however, that many of the queries regard information that is already readily available online.
“People need to read thoroughly what’s available on our website,” he said.

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Last Updated: Wed 11 Apr 2018 02:48 PM GST

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