Tag: UAE

VAT Voluntary Disclosure Form 211

The Federal Tax Authority (FTA) has introduced a form 211 – VAT voluntary disclosure form. It will help the taxable persons to rectify the errors they committed in their UAE VAT Form 201which is already filed. It is an option given by the FTA for the tax periods to voluntarily disclose the errors one has committed.

This disclosure requirement has nothing to do with your VAT return or voluntary registration. The voluntary disclosure referred to is only to be used in the  circumstances if you later discover an error in a VAT return previously submitted.

What is meant by Voluntary Disclosure under UAE VAT Law?

Every Taxable person has an option to rectify the contents of the VAT Return (Form 201) which were already filed. By using the voluntary disclosure option, the taxable person can rectify the amount of tax disclosed by him previously. One can use the form 211 – VAT voluntary disclosure to inform the authority and rectify the same voluntarily before the authority finds it before a tax audit or through an assessment.

 

 

How to use the VAT Voluntary Disclosure Form 211?

Once the taxable person identifies the error or omission he made in his previous VAT return form 201, he can log in to the official portal of FTA by using their user name and password and access the VAT voluntary disclosure form 211 to rectify.

As shown in the above screen shot, the taxable person can select the respective periods wherein a voluntary disclosure is required by clicking the button submit form 211 to rectify the mistakes.

When can one use VAT Voluntary Disclosure Form 211?

If a taxable person makes an error or omission or a wrong treatment of tax by which the output tax payable or input tax recoverable is more than AED 10,000/- for a particular period then, he must use the VAT Voluntary Disclosure form 211 to inform the authority. The form will show the original figures disclosed under “as reported” and will give an option to edit the amount under separate box named “as current”. Further the reason for such discrepancy also should be disclosed.

Once the newly arrived figures are written in the respective boxes under “as current”, the total tax liability under box number 14 also gets changed. This will be the actual tax liability to be paid to the authority. Further, the taxable person should also upload the supporting documents for such voluntary disclosure. It includes a letter describing the background of the facts and a detailed description of the errors disclosed, the reason for voluntary disclosure as well as the impact on the relevant boxes of the tax return.

Penalty while using the VAT Voluntary Disclosure Form 211?

There are two types of penalties.

  1. Fixed penalty
  2. Percentage based penalty

Fixed penalty – if the tax payer uses the VAT Voluntary Disclosure form 211 for the first time, AED 3,000/- shall be levied. For every repetition in using the VAT Voluntary Disclosure form 211 AED 5,000/- shall be charged.

Percentage based penalty – if the tax payer discloses less than the actual tax liability in the return and subsequently uses Form 211 VAT Voluntary Disclosure form, the percentage-based penalty will be as follows:

  • If the taxable person makes a voluntary disclosure before the authority notifies (by way of tax audit or tax assessment), 5% of the tax amount which was not disclosed earlier will be the penalty.
  • If the authority notifies the taxable person for a tax audit and during the tax audit if he makes a voluntary disclosure by using VAT Voluntary Disclosure Form 211, he will be liable to pay 50% of the tax amount.
  • If the taxable person makes a voluntary disclosure after the authority notifies for a tax audit but before starting the tax audit, he has to pay 30% of the tax amount as a penalty.

What if the difference in tax amount identified is less than AED 10,000/-?         

If a taxable person makes an error or omission or a wrong treatment of tax by which the output tax payable or input tax recoverable is less than AED 10,000/- for a particular tax period, then he need not use the VAT Voluntary Disclosure form 211 to inform the authority. He can rectify such errors in the subsequent VAT Return without a separate disclosure.

For Example:

XYZ LLC is a company registered in Dubai and the tax paid is 1st January 2018 to 31st March 2018 and quarterly thereafter. For the first quarter, the total sale was AED 10,000,000/-  out of which 3,000,000/- was an export and the balance 7,000,000/- was standard rated supply. The total output VAT is AED 350,000/-. Recoverable input tax under standard rated expenses (5,000,000/-) was AED 250,000/-. Hence, net tax payable is AED 100,000/-.

Suppose, XYZ  LLC wrongly filed their VAT Return Form 201 – AED 6,000,000/-  as 5% taxable supply and AED 4,000,000/-  as export. In this case it will be showing AED 50,000/- as net tax payable to the authority.

What will be the penalty under voluntary disclosure scheme?

  1. If voluntary disclosure is filed for the first time without any notification from the FTA then fixed penalty is AED 3,000/- and percentage-based penalty will be AED 2,500/- (5% of AED 50,000/-)
  2. If the authority already sent a notification for a tax audit and if XYZ LLC discloses under VAT Voluntary Disclosure Form 211 before the authority starts a tax audit, then the fixed penalty is AED 3,000/- and percentage-based penalty will be AED 15,000/- (30% of AED 50,000/-).
  3. If the authority already started a tax audit and XYZ LLC discloses under the VAT Voluntary Disclosure Form 211 during the tax audit, then the fixed penalty is AED 3,000/- and percentage-based penalty will be AED 25,000/- (50% of AED 50,000/-)

Every taxable person should file their VAT Return with optimum precision within the time frame specified by the UAE VAT Law which is within 28 days from the end of each tax period. A taxable person should ensure that the VAT Return Filing is processed in a correct manner, so as to limit the frequency of using the VAT Voluntary Disclosure Form 211 to avoid penalties.

I strongly suggest to get your VAT Return filed by licensed tax consultants to avoid penalties and fines from FTA.

Nam Accountants can help you to deal on this matter. For more details and information call us now  : 971-558876440

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Visit us : http://www.namaccountants.com/vat-consultants-in-uae.html

 

VAT Registration and Its Impact

VAT Registration And Its Impact

Value Added Tax (VAT)

Value Added Tax or VAT is a tax on the consumption or use of goods and services levied at each point of sale. VAT is a form of indirect tax and is used in more than 180 countries around the world. The end-consumer ultimately bears the cost. Businesses collect and account for the tax on behalf of the government.

VAT Registration – What is VAT registration?

VAT registration is the process of listing your business with the government as active in production and sales. Once you are VAT registered, you will become eligible for the return of VAT.

Implication of VAT on individuals

VAT, as a general consumption tax, will apply to the majority of transactions in goods and services. A limited number of exemptions may be granted.

As a result, the cost of living is likely to increase slightly, but this will vary depending on an individual’s lifestyle and spending behaviour. If an individual spends mainly on those things which are relieved from VAT, he is unlikely to see any significant increase.

The government will include rules that require businesses to be clear about how much VAT an individual is required to pay for each transaction. Based on this information, individuals can decide whether to buy something.

Implication of VAT on businesses

Businesses will be responsible for carefully documenting their business income, costs and associated VAT charges.

Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods/services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.

For more information visit : http://www.namaccountants.com/vat-consultants-in-uae.html

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Contact us : +971-558876440

UAE approves 100% ownership of companies, new ten-year visa

Changes to Foreign Ownership and Visa Rules Announc

Residency system amended

“The UAE will remain a global incubator for exceptional talents and a permanent destination for international investors. Our open environment, tolerant values, infrastructure and flexible legislation are the best plan to attract global investment and exceptional talents to the UAE,” stated Shaikh Mohammad.

He also directed the Ministry of Economy, in coordination with the concerned parties, to implement the resolution and follow up on its developments, and to submit a detailed study in the third quarter of this year.

At a meeting of the Cabinet of the Council of Ministers of the United Arab Emirates (“UAE”), the UAE Government decided to allow foreign investors to own 100% of their businesses in the UAE and approved sweeping changes to the current UAE visa system.

The changes were announced yesterday evening (20 May 2018), on Twitter, by Sheikh Mohammed Bin Rashid Al Maktoum, the Prime Minister of the United Arab Emirates and the Ruler of Dubai.

 

  • What Are The Changes That Have Been Announced?

Anyone coming into the UAE as a professional or as an investor is typically granted a residence visa of two years, which is renewable. This has now been changed to a ten-year visa for investors and professionals in highly skilled fields such as engineering, medicine and science. Students will be given a special five-year visa, while those who consistently perform well and earn top grades will be granted a ten-year visa as well.

Another very significant change is in the ownership of companies. Businesses within the UAE are divided into two main categories: mainland businesses and freezone businesses.

At present, mainland businesses can be partially owned by expatriate entrepreneurs, but must have a UAE national as a majority shareholder in the company. Freezone companies, on the other hand, can have full foreign ownership and are subject to separate regulations depending on the freezone.

With the new regulations, every business, whether mainland or freezone, will be able to have 100% foreign ownership without the need for an Emirati partner.

  1. 10-year residence visas

The system will grant investors and talents up to 10-year residency visas for specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators.

It also grants five-year residency visas for students studying in the UAE, and 10-year visas for exceptional students.

The Cabinet also issued instructions to conduct a review of the residency system with a view to extending residency permits for those sponsored by their parents after completing their university studies to facilitate their future residence in the UAE.

 

    2. When will these changes come into effect?

According to Sheikh Mohammed’s messages, the new changes will be implemented starting with the third quarter of this year. Previous reports suggested that the new investment law should be published by the end of the year. It remains to be seen whether the visa changes will be provided for in the investment law or will be implemented earlier through Cabinet decision or similar legislation.

When implemented, these changes are likely to significantly alter the business environment in the UAE and have a tangible impact on the majority of UAE based businesses and (at least) certain categories of residents. While many questions remain unanswered for now, it is likely that more information will become available in the near future. If you are concerned or have any questions as to how the proposed changes will affect your business in the UAE, please do not hesitate to contact us.

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