Tourist can obtain VAT refund on purchase of goods not less than AED 250/- from UAE markets to be exported, provided that purchase is made as per applicable local laws and rules.
Where to get your receipts export validated
At all the UAE Airports Dubai, Sharjah and Abu Dhabi International Airports (more validation points as approved by UAE Authorities located in Malls)
What’s required at the time of export validation
Tourist will present the sales receipt with the tax refund tag affixed to the back
Process of Applying Refund
Refund Options Available
Tourist can opt for Cash refund up to AED 10000/-
and by Credit Card. Guarantee is taken on Credit Card until the Tax Free Form is validated by the Customs.
Refund Amount and Fees
Tourist will receive 85% of the tax paid, minus a fee of 4.80 AED per Tax Free tag validated
Know VAT Rates while Travelling Different Countries
United Kingdom VAT rate 20%
France VAT rate 20%
Italy VAT rate 22%
Spain VAT rate 21%
Germany VAT rate 19%
UAE VAT rate 5%
VAT is a general consumption tax which is applied on goods and services as the Value incrementally increases at various stages of production, sales and marketing.
Why VAT is implemented in UAE
One of the main reasons for implementing VAT in UAE is to generate more revenue for the government. Using this revenue, the Government plans to offer various types of public services, including medical facilities, good roads, transportation facilities, public schools, parks, waste control, and more, the list is endless. VAT will also provide a new source of non-oil revenue for the Emirates.
UAE Tax Authorities requires the business organizations to pay tax on time, which ultimately helps the government to strengthen the economy and take it to the next level. However, it is to be noted that not following the rules might lead business organizations to penalties. The Federal Tax Authority has outlined specific penalties for individuals and organizations for the non-payment of VAT on time. Let’s have a look at them.
VAT Penalties in the UAE
The Government Authorities ensures that the companies and individuals comply with the VAT regulations to the maximum extent. Non-payment of VAT on time would increase the percentage of fines accordingly. Let’s have a look on to the core reasons.
Reasons for VAT Penalties
A business entity who is found guilty of the following tasks falls under the bracket of VAT Penalty.
Failure to VAT Registration
Under Section 12 of VAT, a person needs to register for VAT on the designated timeframe. No matter if the person is aware or not about the VAT liability, if it doesn’t get registered on time, an offence will be noted under Section 51 (1)(a). Moreover, a penalty of AED 20,000 will be charged, and it is to be noted that the fines and penalties won’t be less than AED 500 and might rise up 300%. So, the VAT consultancy firms are trying their best to clear the VAT accounting process to help the individuals and companies get rid of any penalties.
Failure to Maintain VAT Records
Maintaining proper accounting records is a necessary thing in the eyes of the government to carry the business operations legally. If an individual or a company is found guilty of not maintain the proper records required for VAT Tax Dubai, a fine of AED 10,000 is to be paid. If the error gets repeated, a fine of AED 50,000 will be charged. Moreover, the documents are expected to be drafted in Arabic, and failure to maintain this would raise a penalty of AED 20,000.
Failure to Deregister VAT
Any company found guilty of failing to deregister the VAT within a certain timeframe, will be penalized for a fine of AED 10,000.
Failure to Inform About Amendments
Any changes made in the amendments of the company are expected to be informed to the Government of Emirates, and failure to do this will penalize the company for an amount of AED 5000. In case, if the offence is repeated, a fine of AED 15,000 needs to be paid.
Failure to File the Tax Return
A company is expected to file Tax Return at the end of an accounting period. In the UAE, if a company is found guilty of not filing the necessary returns on time, a penalty of AED 20,000 will be imposed. To avoid this, availing tax consultation services from experts is recommended
Incorrect Tax Return Submission
The companies are expected to submit correct information while dealing with the tax return. In case, if incorrect tax return submission is figured, a penalty of AED 3,000 will be applied. In case if repeated, it will rise to AED 5,000. It is to be noted that the fine imposed will be either 5%, 30%, or 50% of the unpaid tax amount, and also depends as to when the submitted has identified and informed the errors.
Disclosure of Business Errors
Similar to that of tax return submission, AED 3,000 gets applied in the first time, and AED 5000 if it gets repeated. The percentage of penalty stands at 5%, 30% or 50% depending upon the time the government authorities were informed.
It can be seen that a company’s VAT implementation are to be handled carefully and are expected to be accurate. Failure to maintain accuracy and perfectness could lead your business in trouble. Are you fully aware of your business errors? If not, then it’s high time to get it done. Are you wondering how to initiate the process? Well, your solution is right below.
Solution: Avail Advisory Services
Opting for best advisory services will help your business to figure out the loopholes in a better way. Getting help from business experts can benefit your business to a great extent. Al Amal Auditors & Tax Consultants stands as one of the best VAT consultancies in Dubai and has been extending its services to multiple clients all over the UAE Region. Our VAT experts are well-versed with the VAT proceedings and can help you ultimately to avoid VAT Penalties. To have a word, do contact us-we’d be glad to hear from you.