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VAT Health Check l Avoidance & Solutions for Errors in VAT UAE

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What is VAT Health Check:

VAT Health Check is a Pre audit of companies financial documents to ensure that all information’s are appropriate and VAT returns are filed correct as per the VAT Law. It is a responsibility of a taxable person to ensure that his business is vat compliant. By providing reconciled accounts and clear audit trail VAT Health Check guarantee that as a business your treatment of VAT is in accordance with current FTA VAT laws and guidelines.

What does VAT Health Check includes?

Majorly following procedures and services will be included in VAT Health Check. Assessment of complete VAT cycle from VAT registration to VAT return filing, including assessment of books of accounts and related VAT documents

  • Reconciliation of accounting record and filed VAT return
  • Reviewing of output and input VAT calculation
  • VAT planning for maximizing input VAT claim, minimizing of output VAT and avoiding VAT penalties as per the UAE VAT law
  • Identification of errors if any in filed VAT return
  • Reviewing of all compliance’s as per Federal Tax Authority rules & regulations
  • Preparing Voluntary Disclosures Form 211, if required to rectify errors made in filed VAT return
  • Assistance in preparation of VAT Audit files with complete audit trail
  • Suggestion of suitable schemes under VAT law as per your business

What Businesses can expect after VAT Health Check

At the outset of completing one year of UAE VAT and stiff penalties under UAE VAT law which leads up to shutting down of the business and cancellation of trade license businesses must conduct VAT Health checks for their respective businesses.

Advantages of VAT Health Check

  • VAT Compliant books of accounts
  • VAT compliant record keeping and documentation
  • Audit file with complete audit trail
  • Proper VAT planning
  • Strategy for avoiding VAT penalties (Major penalties under UAE VAT law listed below)
  • Adequate compliance as per UAE VAT law
  • Businesses can concentrate on their core business activity without worrying on VAT compliance’s
  • What are the major penalties under UAE VAT law?

Major penalties under UAE VAT law on valuation are given below.

Type of Violation Penalties
Failure to keep the required records specified by the tax procedures law and the tax law. 10,000 for the first time. 50,000 for each repeat violation.
Failure of the Registrant to submit a tax return within the time frame specified by the tax law. 1,000 for the first time. 2,000 in case of repetition within 24 months.
Submission of incorrect tax returns. Fixed penalty of:

  • (3,000) for the first time.
  • (5,000) in case of repetition as well as percentage based penalties as specified in law.
Failure of a person or business to facilitate the work of the tax auditor. 20,000
Failure to pay the tax stated in the tax return/tax assessment form within the time frame specified by the tax law. The taxable person will incur a late payment penalty as follows:

  • 2% of the unpaid tax is due immediately.
  • 4% is due on the seventh day following the deadline for payment.
  • 1% daily penalty will be charged on any amount that is still unpaid one calendar month after the deadline for payment, up to a maximum of 300%.

This blog post is written by Mr. Dilip. . Feel free to call our Tax Advisor today for a quality consultation relating your VAT related queries. Please send inquiry to info[at]flyingcolour[dot]com or call +971 4 4542366.

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