Shuraa Tax Blog

Tag: uae vat law

  • FTA’s VAT Administrative Exceptions in UAE

    FTA’s VAT Administrative Exceptions in UAE

    UAE VAT Administrative Exception is a way to provide registrants with concessions or exceptions allowed by the Federal Decree-Law No. 8 of 2017 on Value Added Tax (“Law”). UAE VAT Administrative Exception also stands under the Cabinet Decision No 52 of 2017 on the Executive Regulations of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (“Executive Regulations”)

    The UAE VAT Administrative Exception is under mechanism if difficult circumstances prevent businesses and companies from following certain procedural aspects of the Law or the Executive Regulations.

    Eligibility Criteria for UAE VAT Administrative Exception

    Three conditions describe the eligibility for UAE VAT Administrative Exception for companies and businesses in the UAE: 

    1. It is crucial that the applicant is registered as a commercial entity with the Federal Tax Authority in the UAE.
    1. Fulfil the requirements regarding the relevant Exception Request, as outlined by your tax agent in Dubai or as advised by the FTA.
    1. Be sure to submit all the supporting documents related to the UAE VAT Administrative Exception.

    Categories of UAE VAT Administrative Exceptions

    Only specific categories can make UAE VAT Administrative Exception FTA Requests. Such categories and the fundamental conditions for the exceptions, along with reference from the Law

    UAE VAT Administrative Exceptions are grouped into the following categories –

    Tax Invoices

    The registrant must demonstrate the available records describing the particulars of any supply. The records must also prove that issuing a tax invoice per Article 59(1) or Article 59(2) of the Executive Regulations for UAE Tax Invoices would be impractical.

    Tax Credit Notes

    It is crucial for the registrants or applicants to show the records available to ascertain the particulars of any supply. They also must prove that it would be impractical to issue a Tax Credit Note as per Article 60(1) of the Executive Regulations for UAE Tax Credit Notes.

    Length of the Tax Period

    The registrant should provide the reasons for requesting a change in the length of the Tax Period. The FTA considers the request to change the length of the tax periods in UAE to only for certain categories.

    Nevertheless, while requesting a change, the applicants will have to provide the required information depending on the categories segregated, those are as follows –

    • Individuals: Board members, property owners, and others, such as freelancers, can apply to change the Tax Period. The FTA will consider all the supplies made by persons on these designations before deciding. These commercial individuals must submit the number of invoices issued in the preceding 12 months, including the total tax paid in the preceding 12 months.
    • Constant Tax Refunds: Businesses are in a continual refund position throughout the tax period in the preceding 12 months and expect to remain in the same position. UAE VAT Administrative Exception Requests here are conditioned on whether the registrant expects any change in the business model that may result in a change of refund position.
    • SMEs with funding: Registered SMEs receive official financing approved by the government and can apply for a change in their tax period. You must submit the documentation for the total tax paid and the taxable supplies for the past 12 months.
    • SMEs without funding: Registered SMEs that do not receive official funding approved by any government entity provided the total value of taxable supplies in the preceding 12 months was equal to or less than AED 5 million. The SMEs without Government funding can submit their UAE VAT Administrative Exception requests after displaying total tax paid, taxable supplies or any penalties paid in the last 12 months.

    Change Stagger

    An applicant or registrant who files UAE taxes quarterly uses a stagger. The applicant may request a change in the stagger assigned to him when the Tax Period ends, depending on the month he requests. However, the condition here is that the registrant must provide the reasons for requesting the change in stagger.

    How do you submit a VAT administrative request in the UAE

    Once you have completed the VAT Administrative Exception Application Form, you can view the status of your application on the Emaratax portal. The status will be updated to reflect the current stage, such as “in review,” “approved,” “rejected,” or “additional information requested.“

    Who Can Submit the VAT Administrative Exception Application Form on Your Behalf?

    The VAT Administrative Exception Application Form can be submitted by:

    • The authorised signatory of the registrant.
    • The registrant’s appointed tax agent.
    • The registrant’s appointed legal representative.

    If you are a member of a tax group, the request should be submitted by the tax group’s representative.

    Guidance for Completing the VAT Administrative Exception Application Form

    This guidance is designed to help applicants understand the questions in the VAT Administrative Exception application form and ensure accurate completion. A separate Emaratax user guide provides detailed instructions on submitting the exception request.

    Selecting the Relevant Category

    • Once you select the relevant category for your Administrative Exception, the system will direct you to the appropriate form.

    Completing the Form

    • In addition to filling out the form, you must describe why you seek a VAT Administrative Exception. This should include:
    • A description of why you are requesting based on the outlined criteria.
    • A supporting letter detailing your request’s background and facts, including reasons why you cannot meet the legal requirements and therefore need an exception.

    Providing Supporting Documents

    • You must also submit any documentary proof supporting your request’s factual and legal grounds. This may include alternative documents, sample invoices, contracts, payment slips, or other relevant documents.
    • The type of documents required will depend on the exception category.
    • Accepted file types are PDF, DOC, XLS, XLSX, JPG, PNG, and JPEG, with a total file size limit of 15 MB.

    Following this guidance, you can ensure your VAT Administrative Exception in UAE application is complete and accurate.

    Time Extension for the export of goods

    The FTA can extend the 90 days from the date of supply. In case, if the FTA has determined after the supplier has applied in writing, then the time extensions proceeded in the way segregated below:

    • Due to the nature of the supply, it is not practicable for the supplier to export the goods, or the class of goods, within 90 days of the date of supply.
    • The registrant must provide the actual reasons/circumstances, as prescribed under the law, to seek an extension of time to export goods.

    Need to know more about UAE VAT Administrative Exception or get through your UAE VAT Administrative Exception Requests? Speak to Shuraa Tax Consultants and Accountants in Dubai, we will solve all your problems related to UAE taxation. Get your free VAT consultation by Getting in touch today at +971508912062. You can also drop us an email at info@shuraatax.com.

  • What is Voluntary Disclosure under UAE VAT Law?

    What is Voluntary Disclosure under UAE VAT Law?

    What is Voluntary Disclosure?

    If a taxpayer makes an error or omission in a Tax Return, Tax Assessment or Tax Refund application Voluntary Disclosure can be filled. The Federal Tax Authority (FTA) has introduced a VAT voluntary disclosure form 211. It helps the taxable persons to rectify the errors committed while filing their UAE VAT return.

    When can taxable person submit Voluntary Disclosure?

    If taxable person is aware that a Tax Return submitted to the FTA has errors is incorrect then a Voluntary Disclosure Form can be submitted.

    If taxable person become aware that a Tax refund application submitted to the FTA is incorrect, which resulted in calculating the refund amount to which you are entitled according to the Tax Law, being more than it should have been, then Voluntary Disclosure must be submitted to correct such error.

    Is it compulsory to submit Voluntary Disclosure if errors are made while filing Tax Returns?

    Yes, it is compulsory to submit Voluntary Disclosure, however under two conditions Voluntary Disclosure can be avoided.

    1. If the difference in amount of tax paid and should have been paid is not more than AED 10,000 and
    2. If taxable person can correct the error during the period of filing tax returns.

    What are the criteria to submit Voluntary Disclosure?

    1. If due to the error, payable tax is more than tax required to be paid (which could be more than AED 10,000) then voluntary disclosure must be filed. The voluntary disclosure should be filed within 20 business days from the date when the taxable person become aware of the error.
    2. If due to the error, payable tax is less than tax required to be paid (which could be AED 10,000 or less)
    • Correct the error in the return period in which error is discovered. Time limit will be within the due date for filing the respective tax return.
    • If there is no means through which errors can be rectified and the unpaid tax liability if less than AED10,000 then voluntary disclosure should be filed within 20 business days from the date when the taxable person realised about the error.

    What are the supporting documents required to submit Voluntary Disclosure?

    Along with voluntary declaration a letter needs to be filed which should be explanatory of facts and details of errors. It is also important to mention the reasons because of which Voluntary Disclosures has been submitted. Supporting documents should be uploaded in this section along with mentioned letter.         

    Are there any penalties for submitting Voluntary Disclosure?

    There are 2 types of penalties for submitting Voluntary Disclosure.

    1. A fixed penalty of AED 3,000 is applied for submitting Voluntary Disclosure for the first time.
    2. Repeated submission of voluntary disclosure could cost a penalty of AED 5,000 or more.

    Nevertheless, the FTA also penalises based on percentages as showcased below –

    • If Voluntary Disclosure is filed before the authority notifies to taxable person and before any tax audit, then a 5% of the tax amount which was not disclosed earlier is charged as penalty.
    • If Voluntary Disclosure is filed after the authority notifies for a tax audit but before starting the tax audit, then 30% of the unpaid tax amount is charged as a penalty.
    • If Voluntary Disclosure is filed after start of tax audit, then 50% of the unpaid tax amount is charged as penalty.

    For any VAT related query please speak to our VAT and Tax Return experts. Call us on +971508912062.