Firms have to prove VAT-compliance to tax officials
VAT Talks was held at Fairmont Dubai on 26th August 2017 (Photo supplied)
It's the responsibility of the companies to prove that they are VAT-compliant in according with the UAE laws as the tax officials from Federal Tax authority may visit the company to check records to ensure compliance with the new tax regulations, according to analyst.
Speaking at a forum in Dubai on Saturday, Girish Chand, Director, MCA Chartered Accountants, said all the companies must maintain record in order to show their turnover as well as whether they're charging value-added tax (VAT) from the customer or not.
In addition, those companies which are not registered for VAT cannot charge the tax from the customers.
"When a tax official visits your company, he can ask for your records and it's the responsibility of retailer, wholesaler or any other company to prove that their company's turnover is less than mandatory threshold limit and hence, it's not required to register for the VAT. In addition, he also needs to show his record if company is charging the VAT from the client. Hence, maintaining record would become obligatory for all the entities operating in the UAE," he added.
Girish was speaking at the VAT Talks conference held to discuss impact of VAT on business operations especially their supply chain, working capital, commercial operations and IT systems.
The UAE has announced that it will implement VAT from January 1, 2018, at five per cent. In addition to the UAE, Saudi Arabia has also announced implementation of VAT as part of agreement between Gulf states.
Girish pointed out that if a UAE-based supplier is exporting goods to any registered company in Saudi Arabia, then the local exporter here in the UAE will not have to charge VAT on the goods but the Saudi company will account using the Reverse Charge Mechanism. Similarly, it's vice-versa for Saudi and Emirati companies.
VAT Talks Chapter was hosted by Incospro and Katerpillar with AAC's to create a networking session for businesses and entrepreneurs. This session was addressed by experts from Tally, MCA, Aurifer to explain regulations about value-added tax set to be implemented next year.