VAT in UAE: New deadline for registration extended till April 30
All UAE businesses that missed the December deadline for VAT registration with the Federal Tax Authority (FTA) were given a major relief on Wednesday as they were exempted from penalties for a couple of months.
The FTA gave these companies until April 30 to register for value-added tax (VAT) to avoid administrative penalties as many of them couldn't meet the earlier deadline due to technical, manpower and other issues.
Analysts said the companies who missed the deadline were smaller businesses, those in free zones and branches of foreign companies.
An FTA meeting, chaired by Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and Chairman of the FTA, also reviewed the outcome of the tourist refund tender as the refund system will cover outlets and shops.
"The results of the periodic follow-up show that the response levels to the tax system by the business sectors and all segments of society are very satisfactory. There is a steady increase in the tax compliance ratios, which confirms the success of the model adopted by the FTA which is based on encouraging self-compliance by businesses through easy electronic registration," Sheikh Hamdan said.
Surandar Jesrani, partner and CEO at Morison MJS Tax Consultancy, stated that the major beneficiaries would be the entities who could not register up to December 4, 2017, or are going to apply now.
"It will include entities like the free zone companies and branches of foreign companies. These entities were expecting some relaxations or exemption from VAT and hence could not register before the given deadline," Jesrani said.
According to Thomas Vanhee, partner at Aurifer Middle East Tax, the FTA's announcement concerns mainly the smaller businesses.