Noted Most Common Mistakes Everyone Makes When Registering VAT in UAE

vat registration uae

Noted Most Common Mistakes Everyone Makes When Registering VAT in UAE

Value Added Tax (VAT) has been in effeсt in UAE from January 2018. Several registration requirements are subject to business owners under the VAT law. The requirements include filing VAT returns with FTA and maintaining their records, and more.

During VAT registration and return filings in UAE, most business owners tend to make the same common mistakes and errors, which lead to penalties or even late delays in the whole process of registration.

This blog explains some of the most repeated mistakes by business owners in registering for VAT in UAE. The information highlighted here will help you get through this process without making rookie mistakes.

Here are the most noted common mistakes that almost everyone makes when registering VAT in UAE


Late Filing of the VAT Returns


Your VAT return needs to be filed within certain deadlines. There are quarterly and monthly deadlines defined by the FTA for filing VAT returns. Most businesses either fail to submit the returns on time or wait last minute before doing it.

This leads to so many errors and omissions in the VAT calculation and filing process. So, you need to stay on top of every VAT deadline and avoid missing VAT return filing at all costs.   


Not Paying Attention to Accurate Record Maintenance


Every expert accounting firm in Dubai suggests that you neeԁ to keep a record of your transactions for at least the past 5 years. In the case of real estate, this duration is about 15 years.

This facilitates both the bookkeeping and filing of the VAT. You need to have a detailed record of things like payments, expenses, receipts, and all the other documentation that is mandated in your VAT filing. 

Most companies fail to maintain or update these records and that creates various issues when registering VAT.      


Inaccurate VAT Calculations


This is another common mistake that people tend to make when filing VAT returns. They do not research and use the correct VAT rates during the calculation.

This results in more inaccurate payments and transaction records which can potentially alarm the FTA and expose you to fines and penalties of sorts.   


Not Including Transactions Covered by Reverse Charge Mechanism


The inaccuracies in transactions that involve reverse change mechanism are more common than you think. When goods and services are obtained from abroad, some people tend to forget to include transactions covered by this mechanism in the VAT returns.

These transactions pass through customs as existing standard procedures and that means these must be included in the VAT returns.   


Bad Debt Relief


Article 64 of the Federal Decree-Law No. 8 of 2017 on VAT gives relief for bad debts. You can only claim bad debt after waiting six months from the supply date.

If you don’t file your VAT registration on time or fail to adjust your input VAT after late payments to the creditors, that compromises your eligibility.    


Not Seeking Professional Assistance


Not hiring a professional vat consultancy Dubai makes it hard for business owners to leverage VAT laws. A consultancy with a competent staff will help you comply with every VAT regulation saving you from penalties and countless complications resulting from inaccurate or untimely VAT registration.   


Incorrect Usage of Adjustment Columns


The wrong use of adjustment columns is another major mistake that can halt VAT registration. The main purpose of these columns is the adjustment of bad debts and the sale of commercial properties.

What businesses do is they tend to correct errors in the previous VAT returns using the adjustment columns. This alarms this FTA and encourages them to ask more questions. This practice can lead to penalties if the FTA comes up with suspicious numbers during the investigation.     


Inaccurate “Tax Point” Entries


A tax point is simply the exact date on which a particular transaction becomes subject to VAT. Most businesses fail to include the VAT on transactions on the tax point or the date on which it falls.

This failure to include transactions that fall on a specific date on the appropriate return during the tax period has many adverse consequences. This mistake mostly occurs at the end of tax quarters and results in the addition of the VAT in the incorrect term.       




To make sure you do the VAT registration accurately, you need to avoid all of these mistakes and have a general idea about what the FTA expects from you. 

If you delay the registration, calculate VAT inaccurately, and fail to add the right adjustment columns and tax points, you will slow down the registration process which can make you liable for penalties and significant financial loss.

So, make sure to do the VAT registration following all the recommended practices and procedures and contact accounting professionals if you have any confusions regarding the process.  

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