VAT q&a: 'Can my company de-register without paying any fines?'

The Dubai entity terminated its commercial licence a year ago but failed to alert the FTA

According to The National's poll, 57 per cent of respondents says their company does not give out raises. The National

Our company terminated its commercial licence a year ago, but did not de-register from VAT on the online portal. The company has now incurred Dh7,000 in fines. How can I de-register without paying the fines? ES, Dubai

You cannot de-register from VAT without paying the fines first. The moment you fail to file a VAT return, you are automatically fined Dh1,000. For each subsequent failure to file, there is a further fine of Dh2,000. It appears you have one fine of Dh1,000 and three subsequent Dh2,000 fines, totalling Dh7,000.

To solve this, you must submit the missed returns on the Federal Tax Authority portal immediately. Even if they are zero returns, this needs to be done to avoid further charges. I advise paying the existing fines, then completing a reconsideration form asking the FTA to waive the fines imposed.

The form can be found on the FTA website, but the form and all supporting documentation must be submitted in Arabic. To apply for reconsideration and de-registration, the FTA says you must have paid any outstanding tax and penalties first.

Once the reconsideration form is submitted, start the de-registration process from your dashboard on the FTA portal. Continue to file nil returns until your de-registration has been finally approved. Fail to do this and the FTA will continue to fine you each quarter.

All businesses must be aware of the law or take professional advice if they are making changes to their business that may affect their VAT registration status. There is a legal requirement to deregister from VAT within  20 days of ceasing to make taxable supplies. Unfortunately, you may find the FTA issues further penalties in addition to the Dh7,000 because you have not complied with this. Even if you ask for the existing fines to be reconsidered, there is no guarantee the FTA will refund these.

Do local companies have to mention the currency in the tax invoice?  BR Dubai

The legislation covering tax invoices is included in Article 59 of the Executive Regulations of the Decree Law. The FTA has also issued the public clarification document VATP006 covering the content and format of tax invoices. Both of these can be found on the FTA website.

This is what must be included on a full tax invoice; note that the requirements for a simplified tax invoice are different. The words “Tax Invoice” should be clearly displayed on the invoice along with the name, address, and Tax Registration Number (TRN) of the registrant making the supply.

Also make sure to include the name, address, and TRN of the recipient, if they are registered, as well as the invoice date, the date of supply and a description of the goods or services supplied. For each invoice line, the unit price, quantity supplied, rate of tax and the tax amount in dirhams must be present along with any discount offered, the gross and the tax amounts payable in dirhams with the exchange rate if the currency is different.

A simplified tax invoice can be raised when the customer is not VAT registered or if the invoice total is less than Dh10,000.  For simple invoices, the line amounts should be shown as gross with the total tax shown separately, usually at the bottom.

There is no specific requirement to state the currency, unless you are issuing an invoice in a currency other than dirhams. The fact the law mentions tax and line amounts being shown in dirhams, however, indicates that there is an expectation the UAE currency will be shown on the invoice. If you are still unsure, ask the FTA using a Clarification Form – available on the its website – which offers technical clarification on matters of uncertainty.

Lisa Martin, a chartered accountant with more than 20 years' commercial finance experience, is the founder of accounting, auditing and VAT consultancy, The Counting House. Email any VAT queries to [e-mail]