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FTA urges companies to register for VAT without delay

Over 260,000 companies register for VAT so far

Image Credit: hmed Kutty/Gulf News
Khalid Al Bustani (centre) speaks in Abu Dhabi.
Gulf News

Abu Dhabi

At least 260,000 companies and over 10,000 groups comprised of multiple companies have registered to pay value added tax, the director general of the Federal Tax Authority Khalid Al Bustani said in Abu Dhabi on Tuesday.

Value Added Tax was rolled out across the UAE and Saudi Arabia from January 1 with most items including food and beverages, electronic goods, jewellery, petrol, among others falling under the tax system.

“We are satisfied with the implementation of VAT registration so far. Applications of some companies are under process and some applications have been returned because of wrong information. We are expecting to conclude the remaining registration process soon,” said Al Bustani, while urging firms with an annual turnover of more than Dh375,000 to register without any further delay.

“If the companies do not register they will be breaking the law. Companies who are ready to register should not delay the process,” he added, without elaborating further.

The Federal Tax Authority was inundated with applications as soon as the registration process commenced. The authority received more than 50,000 applications in a day, Al Bustani said adding that it also receives 3,000 calls and 3,500 to 4,000 emails daily at its customer service centres.

After 23 days of the implementation the process is under control now, Al Bustani said. Companies which are not yet ready for registration in terms of documentation are advised to visit the authority’s website and complete the process. Incomplete applications are likely to be returned.

He also pointed out that if consumers have questions or doubts whether tax registration number (TRN) shown on the purchase receipt is correct or not, they are required to visit the authority’s website and type the number in the search section to ascertain whether the company is registered for VAT.

Two call centres — one in Abu Dhabi and the other in Dubai — have been set up to answer queried related to VAT.

“The authority is also registering tax agents,” Al Bustani, said noting that they have received 400 requests so far but have approved only two.

Revenue from VAT is expected to support the UAE’s GDP growth and aid in the economy’s diversification plans. “The impact on individual cost of living is minimal (about 1.4 per cent) as the value added tax is just five per cent. However, VAT will support the economic growth and will also help the economy in diversifying its revenues.”

When asked whether the UAE plans to introduce more taxes in future, he said it is a fiscal policy matter and such decisions are left to the ministry of finance.

The official reiterated that that value added tax is applicable to all food items with no exemptions.

“Prices should not exceed five per cent maximum and no company is allowed to increase prices due to tax.”

The comments come as Abu Dhabi’s Department of Economic Development (DED) begins a crackdown on businesses that are overcharging customers in the name of VAT. Al Bustani said that the Federal Tax Authority is working closely with the other emirates’ economic departments to control prices and help companies to register.

Earlier this month, DED fined businesses that were collecting tax without registration as well as for unjustified hike in prices.