Tax expert Lisa Martin says the rules around de-registration are "a little complicated". Getty
Tax expert Lisa Martin says the rules around de-registration are "a little complicated". Getty
Tax expert Lisa Martin says the rules around de-registration are "a little complicated". Getty
Tax expert Lisa Martin says the rules around de-registration are "a little complicated". Getty

VAT q&a: 'I tried to de-register a year ago but now have Dh5,000 in fines'


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I applied for de-registration on February 22 last year and it's been "pending" ever since. I've reached out to the Federal Tax Authority numerous times but still nothing has been resolved. On the e-services page it says I need documentation to prove why I am de-registering but it doesn't say which documents. The reason is due to staff members leaving and the sales revenue of the business going forward would be below the limits for VAT. I've had a fine of Dh5,000 on my account for a while now as I didn't submit a return in 2018 as I was well below the threshold.  JG Dubai

You don’t specify if you registered voluntarily or mandatorily, however given the circumstances I assume you registered voluntarily when VAT was introduced at the start of last year.

The rules around de-registration are a little complicated. A person registered under VAT can apply to do this in two circumstances: first if you stop making taxable supplies and do not expect to make any over the next 12-month period. Second, if your taxable supplies or taxable expenses incurred over the last 12 consecutive months is less than the voluntary registration threshold of Dh187,500 and you do not anticipate crossing this threshold in the next 30 days.

However, if you originally voluntarily registered for VAT; you are not allowed to de-register until 12 months have passed. Also, once you have registered, you are obligated to file quarterly VAT returns regardless of your turnover.

You mention your turnover has been below the voluntary registration threshold, but this is irrelevant if you register. Once registered even if your turnover is zero, you must still file quarterly nil VAT returns on the FTA portal within the deadlines.  Failing to do so incurs an immediate fine of Dh1,000 for the first offence and Dh2,000 for each subsequent late return or unfiled return. It appears you have now failed to file three returns and have therefore been fined Dh1,000 for the first quarter, Dh2,000 for quarter two and a further Dh2,000 for the third quarter.

Under voluntary registration the earliest you could apply for de-registration is January 1 2019. To de-register, you must first file the missing returns with the correct figures for your taxable turnover and pay the outstanding fines.  The fact that you are below the threshold does not mean the returns should be zero. They should reflect your actual taxable business transactions, however small.

You must do three individual returns, one for each quarter that you have missed.  Only then will the FTA consider your de-registration request. Also, try to submit a reconsideration form to get the fines reimbursed.  It’s probably worth submitting the request but unfortunately I’m not hopeful you would be successful.

This highlights why it’s vitally important to seek professional help if you are not sure that you are complying with legislation. A genuine mistake can prove costly as fines and penalties add up quickly.

I have a freelance supplier who has invoiced me without adding VAT - is this allowed?  How do I reflect the invoice in my accounting system? SW Dubai

Small businesses or start-ups whose taxable turnover is below the mandatory VAT registration threshold of Dh375,000 do not need to be VAT registered. A perfectly legal, licensed small business may never need to register, and this is fine. In this case you would expect to be invoiced without any VAT added or mentioned anywhere on their invoices. It is each business's responsibility to register for VAT when they are legally required to do so and as a customer you would not expect to have visibility of total taxable sales. From a personal perspective, if I suspected a supplier should be VAT registered and was not, I would ask them to confirm in writing they are not required to register.  If they were unwilling to do that, I wouldn’t work with them.

In terms of accounting, you just input the invoice and code it with zero VAT.  You can only offset input VAT where it is supported by a fully compliant tax invoice or receipt. If you know you have been charged VAT but have not retained the invoice or receipt, then unfortunately you should not reclaim the VAT.

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 pf@thenational.ae

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ESSENTIALS

The flights

Emirates flies direct from Dubai to Rio de Janeiro from Dh7,000 return including taxes. Avianca fliles from Rio to Cusco via Lima from $399 (Dhxx) return including taxes. 

The trip

From US$1,830 per deluxe cabin, twin share, for the one-night Spirit of the Water itinerary and US$4,630 per deluxe cabin for the Peruvian Highlands itinerary, inclusive of meals, and beverages. Surcharges apply for some excursions.

Lowest Test scores

26 - New Zealand v England at Auckland, March 1955

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Non-profit arts studio Tashkeel launched this annual initiative with the intention of supporting budding designers in the UAE. This year, three talents were chosen from hundreds of applicants to be a part of the sixth creative development programme. These are architect Abdulla Al Mulla, interior designer Lana El Samman and graphic designer Yara Habib.

The trio have been guided by experts from the industry over the course of nine months, as they developed their own products that merge their unique styles with traditional elements of Emirati design. This includes laboratory sessions, experimental and collaborative practice, investigation of new business models and evaluation.

It is led by British contemporary design project specialist Helen Voce and mentor Kevin Badni, and offers participants access to experts from across the world, including the likes of UK designer Gareth Neal and multidisciplinary designer and entrepreneur, Sheikh Salem Al Qassimi.

The final pieces are being revealed in a worldwide limited-edition release on the first day of Downtown Designs at Dubai Design Week 2019. Tashkeel will be at stand E31 at the exhibition.

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What can you do?

Document everything immediately; including dates, times, locations and witnesses

Seek professional advice from a legal expert

You can report an incident to HR or an immediate supervisor

You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline

In criminal cases, you can contact the police for additional support

Notable salonnières of the Middle East through history

Al Khasan (Okaz, Saudi Arabia)

Tamadir bint Amr Al Harith, known simply as Al Khasan, was a poet from Najd famed for elegies, earning great renown for the eulogy of her brothers Mu’awiyah and Sakhr, both killed in tribal wars. Although not a salonnière, this prestigious 7th century poet fostered a culture of literary criticism and could be found standing in the souq of Okaz and reciting her poetry, publicly pronouncing her views and inviting others to join in the debate on scholarship. She later converted to Islam.

 

Maryana Marrash (Aleppo)

A poet and writer, Marrash helped revive the tradition of the salon and was an active part of the Nadha movement, or Arab Renaissance. Born to an established family in Aleppo in Ottoman Syria in 1848, Marrash was educated at missionary schools in Aleppo and Beirut at a time when many women did not receive an education. After touring Europe, she began to host salons where writers played chess and cards, competed in the art of poetry, and discussed literature and politics. An accomplished singer and canon player, music and dancing were a part of these evenings.

 

Princess Nazil Fadil (Cairo)

Princess Nazil Fadil gathered religious, literary and political elite together at her Cairo palace, although she stopped short of inviting women. The princess, a niece of Khedive Ismail, believed that Egypt’s situation could only be solved through education and she donated her own property to help fund the first modern Egyptian University in Cairo.

 

Mayy Ziyadah (Cairo)

Ziyadah was the first to entertain both men and women at her Cairo salon, founded in 1913. The writer, poet, public speaker and critic, her writing explored language, religious identity, language, nationalism and hierarchy. Born in Nazareth, Palestine, to a Lebanese father and Palestinian mother, her salon was open to different social classes and earned comparisons with souq of where Al Khansa herself once recited.

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Serbia 1
Kolarov (56')

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Common OCD symptoms and how they manifest

Checking: the obsession or thoughts focus on some harm coming from things not being as they should, which usually centre around the theme of safety. For example, the obsession is “the building will burn down”, therefore the compulsion is checking that the oven is switched off.

Contamination: the obsession is focused on the presence of germs, dirt or harmful bacteria and how this will impact the person and/or their loved ones. For example, the obsession is “the floor is dirty; me and my family will get sick and die”, the compulsion is repetitive cleaning.

Orderliness: the obsession is a fear of sitting with uncomfortable feelings, or to prevent harm coming to oneself or others. Objectively there appears to be no logical link between the obsession and compulsion. For example,” I won’t feel right if the jars aren’t lined up” or “harm will come to my family if I don’t line up all the jars”, so the compulsion is therefore lining up the jars.

Intrusive thoughts: the intrusive thought is usually highly distressing and repetitive. Common examples may include thoughts of perpetrating violence towards others, harming others, or questions over one’s character or deeds, usually in conflict with the person’s true values. An example would be: “I think I might hurt my family”, which in turn leads to the compulsion of avoiding social gatherings.

Hoarding: the intrusive thought is the overvaluing of objects or possessions, while the compulsion is stashing or hoarding these items and refusing to let them go. For example, “this newspaper may come in useful one day”, therefore, the compulsion is hoarding newspapers instead of discarding them the next day.

Source: Dr Robert Chandler, clinical psychologist at Lighthouse Arabia