Even after almost three years of its implementation, the value-added tax is still quite a complicated and confusing matter for small business organizations. The peculiarities of zero-rated, standard, and exempted goods and services add to the confusion of the business authorities, who often fail to acknowledge and fulfill their responsibility.
There is still a significant percentage of business authorities that can be declared illiterate in terms of value-added tax payments. To hold such authorities accountable of their actions and mistakes, the Federal Tax Authority conduct VAT audit and checks the records and tax payments data of the business organization. If they are found guilty of any mishap, they are liable to face serious circumstances like fines and penalties.
Dig deeper into this article to explore how small business organizations can avoid VAT audits in the UAE and follow them to save your business.
Tax payment is one of the most undeniable responsibilities of every business organization. Although small businesses have the option of not paying tax in the first year of their operation, they have to register for VAT and pay the due amount if their sales and profitability increase the VAT threshold. In case they do not pay tax after crossing the threshold, they invite VAT audit, which makes them face bigger repercussions.
Here are some tried and tested tips to save your small business organization from VAT audits in the UAE.
The very first tip to save your small business from a value-added tax audit is to know about the targets of the audit process. The authorities conduct an audit to check the figures and ensure that tax has been paid accordingly. If there is some issue with figures, you might face penalties. Some small business organizations prefer to hire experts to calculate and pay the tax efficiently and save them from VAT audit.
The next tip to save your small business from a value-added tax audit, which is quite essential, too, is to be accurate in your VAT calculations. It means that you need to manage your books efficiently while maintaining the record of all the transactions. In addition to it, calculating input and output VAT efficiently is also critical to avoid mistakes that can, in return, invite the audit process.
Another important tip small business organization should follow to avoid VAT audit is not hesitating from giving explanations. Suppose your business has received unexpected profit or loss, which impacts the tax figures. You can share the details of account books to show evidence to the point. It does not mean that you are guilty of some wrongdoing and need to explain, but adding the evidence will save your precious time.
One of the most important tips to save small business organizations from a value-added tax audit, which is often ignored, is to file for tax on time. Most of the small organizations consider that they are yet to reach the fixed threshold and do not make the effort of recalculating their sales. All of this invites the audit procedure and wastes their time, in addition to ruining reputation. So, be sure to file for tax on time to stay safe.
Another critical tip to save your small business organization from a VAT audit is to manage the tax return efficiently. Do not assume that you are done with your responsibility once you have paid the value-added tax. You have to take care of VAT returns, too, in case there is a change in the value of goods and services. So keep your tax knowledge updated and handle all the related processes to avoid an audit.
Lastly, the best and most effective tip to save your small or even multinational business from value-added tax audits in the UAE is to consult the experts. The experts can easily handle the complex business data and prepare it smoothly for the review of official and non-official authorities, which culminates the need for audit procedure. You can also hire the best VAT consultancy in Dubai and let the expert take care of VAT-related matters while you focus on your business operations.
If you are also worried about a value-added tax audit, sticking to the above-mentioned tips can provide substantial support. Moreover, if you lack proper knowledge and expertise in terms of taxation, then consulting the experts and letting them take care of all the complicated matters is the best solution for you. So, contact the professionals now and forget all your taxation or audit worries and manage your business operations smoothly.
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