Owing to the revised laws and policies of the UAE government regarding VAT laws, many businesses are registering for Value Added Tax. A general awareness related to the benefits of VAT registration has come to light following the new policies regarding reclaiming input VAT and tax in general. With more and more businesses growing and building operations in the region, input VAT reclamation has created confusion among sellers about the general procedure, benefits, and pitfalls. However, experts in the area can help you out in not only the calculation of VAT, but also in enhancing your business and boosting your business profile. All you need is the best VAT consultancy in Dubai to help you out. Read on to know some important pitfalls that you need to consider. Issues to Consider while Reclaiming Input VATConsidering the multifaceted structure of input tax for business, it’s essential to have experts on your side to help you identify problems and create workarounds to promote your business and also develop a good reputation. Read on to know which some common-issue with the reclamation of VAT: 1- Reclamation before RegistrationIt's critical to reclaim the maximum amount of input tax on business expenses. The VAT incurred before the business registers for VAT is ignored more too often. However it’s also essential to know about the allotted time that allows backdating of VAT before registration. It’s important to note that: only the businesses registered for VAT can reclaim VAT purchases and the claims made must be related to VAT taxable supplies and products. 2- Duplication of InvoicesDuplication is often a very common input tax error mainly due to the increased usage of computers, photocopiers and other devices to generate invoices. It's essential to steer away from proforma invoices when reclaiming input VAT. 3- Transposition in InputsCommon error whether genuine or careless, resulting in the smallest change in digits can be extremely costly for the company. To avoid input errors it’s essential to ensure error free setting up of spreadsheets along with data inputs. Apart from that vigorous rechecking system should be in place to ensure that the data being input is accurate. 4- Partial ExemptionIn the case that a business has a mixture of exempted and taxable supplies, it is only partially exempted and business needs to claim input tax for the taxable supplies. Numerous businesses may never realize that they are partly exempted or do not have the knowledge to help them calculate partially exempted input tax. 5- Entertainment Costs for BusinessesThe VAT on entertainment costs for business may also often be very confusing. In a general perspective, reclaiming input VAT is not permissible for business entertainments unless it's being given to overseas customers or employees. For example: Food, drinks, accommodation, tickets, sporting events facilities and entries are all used for entertainment purposes. 6- Tax Reclamation for CarsIt’s possible to reclaim input tax on cars, in the case that one of the following applies:
7- Missing Links with Taxable TransactionsThe absence of a link to taxable transaction input tax deduction is only possible, in case the purchased goods or services are directly linked to a taxable transaction. Expert advice may often be needed to determine the nature of the exchange. ConclusionRegardless soft the age of businesses, it’s critical to register for VAT due to the many benefits, however, the complicated and most layered structure of VAT in UAE makes it impossible to figure it out without expert help. Opt for the best VAT consultancy in Dubai, and you're safe from all the pitfalls mentioned above and more concerning reclaiming input VAT. Less financial losses and fines mean more reputable and reliable business!
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10/13/2022 07:50:06 am
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