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Time running out for UAE businesses to register for VAT

dubai - Companies only have 15 days to get the tax registration number

Companies in the UAE that have not got their tax registration number (TRN) yet will have to procure it within the next 15 days.

Companies who have not completed their VAT registration within the dates prescribed by the Federal Tax Authority (FTA) will have to pay a fine worth Dh20,000 and also stop sales until they get the TRN or tax registration certificate (TRC). This is the warning issued by tax experts as the January 1 deadline looms for VAT implementation.

Mayank Sawhney, director, MaxGrowth Consulting, told Khaleej Times in an interview those companies that applied for VAT registration with incomplete or incorrect details will not get their TRN or TRC by December 31, 2017. They will face a financial penalty of Dh20,000 and need to stop issuing invoices until they get a TRN or TRC from the FTA.

As part of the GCC agreement, the UAE will implement five per cent VAT on a host of goods and services from 7am on January 1, 2018, along with Saudi Arabia.

He said the FTA had promised to issue the TRN and TRC by December 31, 2017 to companies which had applied for VAT registration before the December 4 deadline. However, if a company filed for VAT registration after December 4, there is no assurance from the FTA of issuing the TRN and TRC by December 31.

But if a company's VAT registration application is incomplete or incorrect, the FTA normally sends a re-submission request and asks for updating the profile via e-mail or through their accounts created for VAT registration, Sawhney said. One of the main reasons why companies have not got the TRN is because their profiles are incomplete or some of the information has been not stated correctly in their VAT registration application.

Sawhney was speaking on the sidelines of the 'VAT Open World' seminar held in Dubai on Saturday by the UAE's first English newspaper Khaleej Times and the Institute of Chartered Accountants of India (ICAI) with the support of Qadi Accountants, a boutique advisory firm that provides services ranging from audit, accounting, advisory and taxation.

"In a nutshell, businesses will not be able to carry on invoicing if they don't have the TRN by December 31. They will not be in a position to do tax invoicing at all. They might have to hold their sales for a few days until they get the TRN. The FTA is committed that all the businesses who applied for registration in time before December 4 will get a TRN by December 31.

"If you put in a proper application by December 4, the FTA will issue a TRN by December 31. If you've submitted the application after December 4, there is no guarantee of receiving a TRN or TRC before December 31. If companies have not got a TRN, they will have to withhold operations until they get it. Otherwise, the fine and penalties are quite hefty," he said.

He explained that if there is any administrative issue from the FTA's side in processing the VAT registration application filed wthin the prescribed time, there would be no fine. But if the file is incomplete or any information or declaration given in the application is false, then a fine would be levied.

"If someone has not completed the registration process by December 31, the FTA is probably going to levy a fine of Dh20,000."

Pramod Rajgaria, CEO, Star Cement, said all large organisations are ready as they have been working for the past six to seven months. "They are almost there. I feel the struggling lot is small and medium enterprises because of lack of knowledge and financial constraints."

Srinivas Achar, CFO, National Hospital, said some of the healthcare service providers are ready to meet the January 1 deadline while others are not fully prepared as yet.

"It is a mixed bag in terms of preparedness. A few hospitals conducted studies months ago while some are yet to prepare. Smaller players say healthcare is zero-rated and they are have not registered yet. This could be dangerous. All the players need to realise that compliance is necessary," he added.

- waheedabbas@khaleejtimes.com