The topic is highly relevant for business owners, so let’s highlight it in several articles.
Let's start with answers to the question: why is VAT so crucial for electronic and IT services?
🔺 8 out of 10 IT companies believe that if their client is outside the UAE, they do not need to register for VAT. As a result, the fines for these companies ranged from 11,000 to 25,000 AED.
🔺 Almost all Marketplaces believe they do not need to issue tax invoices during the sale of B2C services. Meanwhile, the penalty for not providing an invoice or tax credit note is 2,500 AED for each detected case.
🔺 Almost all providers of electronic services do not know that the rate (without VAT, 0% or 5%) depends on the place of consumption of electronic services, not on the supplier's place of registration, place of contract conclusion, or payment execution.
What are the VAT penalties?
🔺 Late submission of VAT payer registration - 10,000 AED. This will be applied after approval of the VAT payer registration application.
🔺 Late submission of VAT return (if available) - 1000 AED (first time) or 2000 AED (in case of repeated submission within 24 months). This will be applied after submitting the VAT return for the previous date.
🔺 Late payment of VAT amount (if VAT returns for the past period are contained in the positions to be paid VAT) - 2% of the unpaid tax immediately payable + 4% of the unpaid tax payable one month after the payment date and every month on the same day after that (maximum up to 300%).
Let's start with answers to the question: why is VAT so crucial for electronic and IT services?
🔺 8 out of 10 IT companies believe that if their client is outside the UAE, they do not need to register for VAT. As a result, the fines for these companies ranged from 11,000 to 25,000 AED.
🔺 Almost all Marketplaces believe they do not need to issue tax invoices during the sale of B2C services. Meanwhile, the penalty for not providing an invoice or tax credit note is 2,500 AED for each detected case.
🔺 Almost all providers of electronic services do not know that the rate (without VAT, 0% or 5%) depends on the place of consumption of electronic services, not on the supplier's place of registration, place of contract conclusion, or payment execution.
What are the VAT penalties?
🔺 Late submission of VAT payer registration - 10,000 AED. This will be applied after approval of the VAT payer registration application.
🔺 Late submission of VAT return (if available) - 1000 AED (first time) or 2000 AED (in case of repeated submission within 24 months). This will be applied after submitting the VAT return for the previous date.
🔺 Late payment of VAT amount (if VAT returns for the past period are contained in the positions to be paid VAT) - 2% of the unpaid tax immediately payable + 4% of the unpaid tax payable one month after the payment date and every month on the same day after that (maximum up to 300%).