A store cashier receives payment from a customer on Tuesday, Nov. 8, 2011, at a local convenience store in Abu Dhabi. (Silvia Razgova/The National)
 currency dirham dirhams
A store cashier receives payment from a customer at a local convenience store in Abu Dhabi. Silvia Razgova / The National

Revealed: tens of thousands of companies yet to register for VAT

About 260,000 companies have registered for VAT but tens of thousands of others are yet to do so - weeks after the deadline passed.

Khalid Al Bustani, head of the Federal Tax Authority, on Tuesday urged businesses to get their affairs in order.

But he suggested there would be leniency and said no date has been set for the issuing of fines.

Last week, the authority also said companies would be given a few months before they had to file their first tax returns to help ease the burden.

Mr Al Bustani could not say exact how many companies are yet to register, last year about 350,000 would be subject to VAT and had to register before December 4, 2017.

In addition to the 260,000, about 10,000 larger 'groups' of companies have also registered.

Online registration for VAT began last September.

"In some countries it takes them up to eight months to register, but with the way things have been going, we believe we will be done soon," he said.

Mr Al Bustani said about 50,000 companies registered in one day last month as the deadline loomed.

When asked when the Dh20,000 fines would be issued, as set out in law, he said: "Our goal is not to fine companies, our goal now is to have everyone register. But whoever avoids registering intentionally will be subject to fines."

Mr Al Bustani said the authority was being flexible and understands that some companies were genuinely not ready yet, however, he said there will be no amnesty period for intentional dodgers and tax evaders.

"In all the other countries that apply VAT, the taxation authority only plays an observatory role, but here the private sector is expecting us to be be a tax adviser," he said.

"We have already done more than our role by providing awareness workshops, and explaining the procedures in detail on the website," he added.

Last year, around 24,000 people attended VAT workshops organised by the ministry of finance.

Moreover, the authority is in the process of introducing tourist tax refund. The law already includes a clause with regards to tourist refund, however, the process will take time, he said.

The authority has been having discussions with the big four international firms that operate the tax refunding process, and they will be starting a tender soon to decide which firm will take care of the procedure in the UAE.

The authority has also received 4,000 applications to register tax agents, out of which 250 have been rejected, he added.

David Daly, a chartered accountant who leads a consultancy practice in the UAE, said he knows of companies that have had their registration forms rejected without a full explanation.

“I know of three entities that have been rejected for reasons of turnover. All believe that they will soon reach the minimum threshold for registration,” he said in reference to the Dh375,000 threshold.

“How is the FTA currently measuring 'soon' by way of accepting an application?”

"When the entities e-mail the FTA they are not getting a response. Ringing doesn't help as individual cases are not entertained, just queries on the law.

"The FTA could support a lot of worried entities by either replying or better, releasing a statement clarifying the requirements for registration."

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