The first-year of any business is crucial for the owners and management. They are in the learning phase and try to set the priorities and accounting checklist according to their situation, which can even backfire. Surviving in the tough and competitive markets is not easier, but the new business organizations in the region also have to be careful about taxation matters.
During the first six months, almost no business has to pay taxes to the federal tax authority. However, by the end of the year, the business operations become clearer and sustainable in addition to making progress. This makes them eligible to pay value-added tax in the UAE. This type of tax is a bit more complicated than others, due to which business organizations end up earning penalties.
Explore this article in detail to learn how your relevantly new business organization can avoid VAT penalties in the UAE.
Top 6 Tips to Steer Clear of VAT Penalties in UAE
Setting up a business is not easy. The management has to face and deal with challenges at every other step. In such a scenario, missing out on the government policies, implications and taxation matters is quite expected, especially if the taxation matters are too complicated, like in the case of value-added tax. On the other hand, you cannot afford to earn penalties on top of numerous other issues.
Here are some of the tried and tested tips to help your new business steer clear of VAT penalties in the UAE.
1. Study VAT Laws
The first and basic tip to steer clear of VAT penalties in the United Arab Emirates is to study the laws in detail. You need to be aware of the laws regarding VAT registration, deregistration, zero-rated, standard rated and exempt product and services and the implications surrounding them. All of this requires extensive research and study, which also needs time. The new business organizations often hire the support of the best VAT consultancy in Dubai to stay updated on the matters, as they lack time to study it in detail.
2. Keep Your Accounting Records Updated
The next tip to avoid any type of penalty over your newly set up business in terms of value-added tax is to keep your accounting records updated. As the value-added tax is applicable according to the increase or decrease in the value of some product or service, paying attention to the accounting details is critical to check the difference in value and ensure the implications of VAT.
3. Set Reminders for VAT Obligations
Most of the new business organizations suffer VAT penalties because they miss the deadline of registration, deregistration, or calculate the payable amount incorrectly or even fail to file or VAT returns. These are some of the critical responsibilities taxpayers have to follow to benefit from this taxation method. You can set a reminder about upcoming VAT obligations, so you do not miss the deadline and end up paying a fine.
4. Ensure Proper Training of Your Teams
One of the best tips to save your business, whether it is new or not, from VAT penalties is to ensure the proper training of your teams. You need to train and equip your accountants and other managers, so they are aware of the function and applicability of the value-added tax. On the other hand, if you lack resources for training, consulting professionals is the best choice.
5. Get Your Calculations Right
One of the biggest reasons for VAT penalties for the new business organizations is miscalculating VAT payment or return payment. There is no doubt that value-added tax is complicated; however, it offers long-term benefits to the business owners, which is the major reason behind its popularity. So, you simply need to get your calculation right, as it is not a matter of a few months or years only but probably a lifetime.
6. Get Experts On Board
Lastly, if you are unable to give proper time to the management and tax handling department of your business, it is much better to hand over the management to experts. On the other hand, if you are unable to grasp the tiny details of taxation even after making an effort, you can hire experts from the best VAT consultancy in Dubai and get detailed guidance, as well as support in handling all tax-related matters.
Watch your mistakes and avoid VAT penalties!
The new business owners and management are often too nervous or overwhelmed to pay attention to the smallest details. You may be paying more attention to production and selling, but tax is another important aspect of the business that needs equal attention. So, avoid ignoring it. If you lack the required skills, expertise or time to tackle it professionally, you can contact the VAT experts and let them tackle all the tax-related issues on your behalf. Contact the experts now to avoid penalties.