Latest news with #VAT
Arabian Business
3 hours ago
- Business
- Arabian Business
Saudi Arabia urges businesses earning over $10.7m to file VAT returns by June 30
Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA) has issued a reminder to all commercial establishments with revenues exceeding SR40m ($10.7m) to submit their Value Added Tax (VAT) returns for May by June 30. Businesses that fail to comply risk penalties ranging from 5 per cent to 25 per cent of the total VAT due, depending on the delay and severity of non-compliance. VAT in Saudi Arabia is an indirect tax applied to most goods and services sold or purchased, with some exemptions. All qualifying businesses are legally required to report and pay VAT on time to remain compliant with national tax regulations. Saudi tax rules Businesses seeking further assistance can access ZATCA support through multiple channels: ZATCA continues to emphasise the importance of timely compliance to avoid penalties and support the efficient operation of the Kingdom's tax system.
IOL News
15 hours ago
- Business
- IOL News
Bellville business owner fined R96,000 for failing to submit tax returns
The Bellville Magistrate's Court has fined a business owner R96 000 for failing to submit various tax returns over several years. "Mayet was the sole member of A and Y Wholesale Retail Enterprise CC, which traded as a wholesale retail enterprise trading under the name and style of Plastipak. The Bellville Magistrate's Court has fined a businessman for failure to submit income tax returns, Value Added Tax (VAT) returns, and Pay as You Earn (PAYE) returns. "The company was registered for Income Tax, VAT, PAYE (EMP 201) and PAYE (EMP 501). "Mayet was the representative VAT vendor, representative employer, and the public officer of the company at the time of the commission of the offences. "He failed to submit Income Tax, VAT, PAYE (EMP 201) and PAYE (EMP 501) returns when they were due. "The offences were committed over several years: VAT returns for a year, PAYE (EMP 201) for two years and PAYE (EMP 501) for five years," Ntabazalila said. "The returns remained outstanding until they were submitted on May 27, 2024. "The accused and his company were convicted on an Income Tax return on behalf of A and Y Wholesale Retail Enterprise CC, two counts of failure to submit VAT returns, five counts of failure to submit PAYE (EMP 201) returns and eight counts of failure to submit PAYE (EMP 501) returns."
Irish Times
a day ago
- Business
- Irish Times
Swings and roundabouts: hospitality VAT reduction means little or no income tax cuts in budget
Budget season kicks off earlier these days and the holding of the National Economic Dialogue (NED) this week – where interest groups put their case - has sounded the starting gun ahead of October's package. Over recent years governments have favoured using scarce resources for extra spending over lower taxes. And this is set to continue. This means less wherewithal for tax cuts – and here the promised return of the VAT rate for the hospitality sector to 9 per cent looms large. Costing over €750 million a year, it would eat up most of the spare cash for tax reductions. And this will be a big political issue. Because the trade off for this is likely to be much less by way of an income tax package for households. READ MORE The VAT move would leave less cash for what are referred to as income tax 'cuts' – but are really adjustments to the income tax system to take account of inflation. If income tax bands and credits are not adjusted for inflation each year, then taxpayers end up seeing a bit more of their income taken in tax – for example with due to a higher proportion of their income being payable at the higher 40 per cent rate. It is what is called 'fiscal drag' in the jargon and is one of the most powerful hidden tax increases available to any government. Just by doing nothing, the tax burden creeps higher. [ Earning a decent income but still scraping by? Your situation may be about to get worse Opens in new window ] Central Bank researchers found that the average income tax rate on all incomes increased from 24 per cent in 2021 to 24.9 per cent last year in 2023. Much of this is due to more people having higher paid jobs but, according to the bank, fiscal drag – the lack of full indexation of the income tax system for inflation is also factor. Some tax relief has been given in recent budgets, but not always enough to take account of wage inflation. And, as things stand, this may continue into 2026. The mood music is interesting. At the NED, Tánaiste Simon Harris spoke of the " solemn commitment' the coalition has given to reduce the hospitality rate back to 9 per cent. The lower rate had applied from 2011 to 2019, when it was increased back to 13.5 per cent. The rate was then cut for all hospitality business on November 1st, 2020 in response to the challenges faced by these sectors during the Covid-19 pandemic. Bobby Healy on why Manna drone delivery could be the 'biggest technology company in the world for its space' Listen | 67:08 The expiry date was extended a few times, but the rate finally returned to 13.5 per cent on September 1st, 2023. Department of Finance officials finally thought they had won the battle – but then the general election came along and a big lobbying campaign from the sector. The subsequent Programme for Government said: 'The Government will bring forward measures to support SMEs (small and medium enterprises), in particular the retail and hospitality sectors, acknowledging the increased cost pressures on these sectors and this will entail changes to VAT, PRSI and other measures.' [ Income tax, USC and rent tax credits: What budget changes are now in effect for 2025? Opens in new window ] While the return to 9 per cent was not mentioned specifically, we were told that the two big parties had agreed that the rate would be returned to this level for 'food-based hospitality'. This means that cafes and restaurants would get the lower rate, but hotels would not – at least in relation to their accommodation services. Splitting in this way may not be easy – the Revenue Commissioners, according to previous Dáil debates, cautioned about 'administrative and operational difficulties'. What happens, for example, to a small Bed & Breakfast which charges one amount for an overnight stay and 'the full Irish?' How is the VAT rate apportioned? Nonetheless, according to Harris, the die is cast. The problem is that even restricting the cut to food-based hospitality will be costly and take up the vast bulk of any likely tax package. Food-based hospitality may be main VAT beneficiary. Department of Finance officials estimated last year that the annual cost of cutting the 13.5 per cent rate to 9 per cent was €764 million, while restricting the cost to food-based items would cost €545 million. The Department, wanting to stop the return, warned against it in last year's pre-budget advisory papers , saying it would represent an " enormous fiscal transfer of taxpayer's money to the sector which the evidence available at present does not support.' Apart from the cost, the Department said that recovery in consumer spending should benefit the sector, where employment had already returned to above pre-pandemic levels. Ireland's VAT rate was not out of line, they argued, as '14 EU countries have a VAT rate of 12 per cent or higher on food services'. The sector's case is also well known – its representatives point to a large number of closures and the financial pressure on SMEs from official measures including a rising minimum wage, and – from next year – pensions auto enrolment, though some extra impositions have been delayed. But the political choices for the Government are stark enough. The total package for reducing tax in the budget may not exceed €1 billion by much, if at all. The VAT package would thus consume a significant amount of this. Other SMEs may wonder why they are being left out. And households may see a very restrained income tax package, which is unlikely to keep pace with wage inflation. As Minister for Finance Pachal Donohoe said somewhat delphically at the NED: 'If we decide that we are going to make a particular set of decisions and investments, that means there are other things that we will not do.' With uncertainties rising, Donohoe and Minister for Public Expenditure Jack Chambers have both underlined the need for caution. [ Some 1.1 million earners in Ireland do not pay income tax or USC, tax institute claims Opens in new window ] They are likely to spell out to colleagues the trade-offs from the VAT cut, particularly in terms of scope for income tax measures. Trade-offs do not imply that a particular policy is " right or wrong' but focus on what is called the opportunity cost – the price of not being able to use the money elsewhere. The VAT cut is unlikely to provide much to consumers, bar perhaps holding down the rate of inflation they face while eating and drinking out. On the flip side, it will limit the cash for adjustments in income tax bands and credits at a time when many budgets of lower and middle income households are tight. Fiscal drag will take its toll. And households will also feel the pinch from the ending of the once-off universal supports in energy credits and double child benefit - assuming that the Government holds to its indications that these will not be repeated. It is impossible to know how the world will look when the budget is presented in October. But whatever happens the first budget of the new administration, coming after last year's pre-budget giveaway, is going to be far from easy to agree on. Prepare for summer sparks in the Cabinet.
Telegraph
3 days ago
- Business
- Telegraph
Parents to pay 20pc tax on private dance classes (but not ballet)
Parents should pay 20pc tax on dance classes, but not ballet because it is taught in schools. Four teachers of ballroom, Latin and 'dancercise' classes lost an appeal against HM Revenue & Customs (HMRC) after they were ordered to pay VAT bills of more than £93,000 collectively. Providers have since been chased by the taxman for unpaid bills and threatened with fines, an industry body claimed. But ballet will continue to benefit from an exemption for 'private tuition', and so instructors will not have to pay VAT. It comes as families last week lost a legal challenge against Labour's controversial 20pc tax raid on private schools. The parents argued the policy was discriminatory against certain children, such as those with special education needs (SEN). The claims were dismissed on the basis that the Government had a 'broad margin of discretion' and that the tax was proportionate in its aims to raise funds for the state sector. One parent wrote online: 'First VAT on school fees, now on my son's hobby. How much money do they want to make off my child? This will kill the industry just like it is killing the private school sector.' The dance instructors previously relied on an exemption in the Value Added Tax Act of 1994, which applied to 'private tuition, in a subject ordinarily taught in a school or university, by an individual teacher acting independently of an employer'. But HMRC argued that the styles of dance which the teachers taught, including 'Kettlercise', were not commonly taught in schools or universities – unlike ballet, for which there are many specialist schools. The First Tier Tax Tribunal found in the taxman's favour in a decision made in May, after it said there was a lack of evidence about what styles of dance were taught in private classes held by the instructors. One claimant, Rushby Dance and Fitness Centre, had been issued with a VAT demand for £21,944 in July 2016, with a penalty of £4,398.80 added in 2019. Jagers Dance and Events, another company represented in the judgment, was told in 2017 to pay £55,571.37, with an initial penalty of £17,374.51 added, although this was later reduced to £11,669. No assessments or penalties had yet been issued by HMRC for the other two companies, the tribunal heard. The decision means that many dance companies, with a higher annual income than the minimum threshold of £90,000, will need to register with the tax authorities and pay VAT for the first time. Neil Harrison, chief executive of the British DanceSport Association, said: 'The British DanceSport Association remains of the firm view that the implementation of this policy is both unfair and unjust. 'It appears to be in direct contradiction to publicly stated government policy promoting health, physical fitness and wellbeing, objectives to which the discipline of dance makes an invaluable contribution.' Mr Harrison said he was in 'active dialogue' with the Treasury and the Prime Minister to challenge the VAT policy. An HMRC spokesman said: 'We note the decision of the tribunal and will carefully consider the judgment.'
Hi Dubai
3 days ago
- Business
- Hi Dubai
VAT Compliance: Common Mistakes Dubai Businesses Make
Since its introduction in the UAE on January 1, 2018, Value Added Tax (VAT) has become an integral part of the business landscape. While many businesses have adapted, VAT compliance remains a complex area, and even minor oversights can lead to significant financial penalties and reputational damage. For businesses operating in Dubai, understanding and meticulously adhering to the Federal Tax Authority (FTA) guidelines is not merely a formality but a critical imperative for sustained operation and integrity. This comprehensive guide aims to shed light on the most common VAT compliance mistakes made by Dubai businesses. By identifying these pitfalls and understanding their consequences, companies can proactively implement robust strategies to ensure full adherence to FTA regulations, safeguard their financial health, and avoid unnecessary fines. Foundational VAT Mistakes: Registration and De-registration The journey to VAT compliance begins with accurate registration and, eventually, correct deregistration. Mistakes at this foundational stage can trigger a cascade of issues. Late or Non-Registration for VAT : One of the most frequent and costly mistakes businesses make is failing to register for VAT within the stipulated timeframe or at all. Understanding Thresholds: Businesses must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000 in the past 12 months, or if they expect to exceed this threshold in the next 30 days. Voluntary registration is permitted for businesses whose taxable supplies and imports exceed AED 187,500. Common Error: Many businesses, especially small and medium enterprises (SMEs), either underestimate their turnover, are unaware of the rolling 12-month calculation, or simply delay the registration process, believing they have more time. Consequence (Penalty): Failure to submit a VAT registration application within the specified timeframe results in an administrative penalty of AED 20,000. Source: Federal Decree-Law No. (8) of 2017 on Value Added Tax , Cabinet Decision No. (40) of 2017 on Administrative Penalties Failure to Update Registration Details : Once registered, businesses have an ongoing obligation to keep their registration details current with the FTA. Common Error: Businesses often neglect to inform the FTA about significant changes, such as a change in their legal status, business activities, authorised signatory, contact details, or bank account information. These updates are crucial for the FTA to maintain accurate records and for you to receive important communications. Consequence (Penalty): Failure to notify the FTA of any changes to tax records within the timeframe specified in the Tax Procedures Law is subject to an administrative penalty. Source: Incorrect De-registration: Just as important as registering correctly is knowing when and how to de-register. Common Error: Businesses that cease operations or whose taxable turnover falls below the voluntary registration threshold (AED 187,500) and are no longer required to be registered sometimes fail to apply for de-registration within the legal timeframe. Consequence (Penalty): Failure to submit a de-registration application within the specified timeframe (20 business days from the date they become eligible for de-registration) incurs an administrative penalty. Source: VAT Executive Regulations, Article (17) , Cabinet Decision No. (40) of 2017 on Administrative Penalties Transactional VAT Errors: Output and Input Tax These mistakes often occur in the day-to-day operations related to charging VAT on sales (Output VAT) and reclaiming VAT on purchases (Input VAT). Misclassifying Supplies (Output VAT) : A fundamental error is misunderstanding and misapplying the correct VAT treatment to various supplies. The UAE VAT law specifies standard-rated (5%), zero-rated (0%), and exempt supplies. Standard-Rated (5%): Applies to most goods and services. Zero-Rated (0%): Applies to specific categories like exports of goods and services outside the GCC, international transportation, certain educational services, certain healthcare services, and newly constructed residential properties sold within 3 years of completion. Exempt: Applies to financial services (unless specific fees are charged), residential property leases (second sale or subsequent), and bare land. Common Error: Incorrectly applying a zero-rate to local sales that should be standard-rated, or failing to charge VAT entirely on standard-rated supplies. Another common mistake is neglecting to account for 'deemed supplies,' which are certain business assets used for non-business purposes or transferred without consideration. Consequence (Penalty): Understating the actual tax due for a tax period, which can lead to penalties on the tax difference and fixed penalties for incorrect tax returns. Source: [VAT Law, Articles (41-47)], [VAT Executive Regulations, Articles (32-47)], FTA Guides on Taxable Supplies Incorrect Input Tax Recovery : Businesses are generally allowed to recover VAT paid on goods and services purchased for their taxable supplies. However, strict conditions apply. Common Error: Claiming Input VAT on ineligible expenses. Examples include entertainment services (e.g., hospitality for non-employees, staff parties not related to taxable supplies), certain motor vehicles (cars not used exclusively for business), or expenses incurred for making exempt supplies. Insufficient Documentation: Another prevalent mistake is claiming input VAT without holding a valid tax invoice or proper supporting documentation that meets FTA requirements. If an invoice is non-compliant, the input VAT cannot be claimed. Consequence (Penalty): Overstating recoverable tax leads to an over-recovery of tax, which essentially means an underpayment of tax due. This can result in penalties on the tax difference discovered during an audit, and if deliberate, could lead to charges of tax evasion. Source: [VAT Law, Articles (53-56)], [VAT Executive Regulations, Articles (54-58)], FTA Guide on Input Tax Documentation and Reporting Missteps Accurate and complete documentation is the bedrock of VAT compliance. Failures here are easily identifiable during an audit. Non-Compliant Tax Invoices : Tax invoices are crucial for both charging Output VAT and recovering Input VAT. They must contain specific information. Common Error: Issuing tax invoices that miss mandatory elements as per FTA regulations. These elements include: The words "Tax Invoice" clearly displayed. Name, address, and Tax Registration Number (TRN) of the Registrant (supplier). Name, address, and TRN of the Recipient (if registered). A unique sequential tax invoice number. Date of issue. Description of the goods or services supplied. Unit price, quantity, and total consideration. The VAT rate applied and the VAT amount payable in AED. Another mistake is failing to issue a tax invoice for taxable supplies at all, or incorrectly issuing 'simplified tax invoices' (which have fewer requirements) for transactions that do not meet the criteria (e.g., sales to unregistered customers under AED 10,000). Consequence (Penalty): Failure to issue a Tax Invoice or issuing a non-compliant Tax Invoice incurs a penalty of AED 2,500 for the first time and AED 5,000 for repetition. Source: [VAT Law, Article (65)], [VAT Executive Regulations, Article (59)], Cabinet Decision No. (40) of 2017 on Administrative Penalties Poor Record-Keeping : Businesses are legally required to maintain detailed records for a specific period. Common Error: Not retaining all required tax records, which include tax invoices, credit notes, debit notes, VAT returns, import/export documents, and any other relevant accounting records. Businesses sometimes fail to keep these for the stipulated 5 years (for most records) or 15 years (for records related to real estate supplies). Lack of organised, accessible, and easily auditable records is a significant compliance risk. Consequence (Penalty): Failure to keep required tax records and other information specified in the Tax Procedures Law results in a penalty of AED 10,000 for the first time and AED 50,000 for repetition. Source: [VAT Law, Article (78)], [Tax Procedures Law, Article (17)], Cabinet Decision No. (40) of 2017 on Administrative Penalties Filing and Payment Lapses These are arguably the most common and easily trackable mistakes that incur immediate penalties. Late Filing of VAT Returns : VAT returns must be submitted to the FTA electronically via the EmaraTax portal. Common Error: Missing the filing deadline, which is typically the 28th day following the end of each tax period (monthly or quarterly, depending on the business's registration). Many businesses underestimate the time required to compile all necessary data for accurate return submission. Consequence (Penalty): Failure to submit a Tax Return within the specified timeframe incurs a penalty of AED 1,000 for the first time and AED 2,000 for repetition. Source: [Tax Procedures Law, Article (20)], Cabinet Decision No. (40) of 2017 on Administrative Penalties Late Payment of VAT Due : The net VAT liability (Output VAT minus recoverable Input VAT) must be paid to the FTA by the same deadline as the return filing. Common Error: Cash flow management issues or simple oversight leading to delayed payment of the net VAT due. Consequence (Penalty): Penalties for late payment are severe and compound quickly: 2% of the unpaid tax, imposed immediately after the due date. of the unpaid tax, imposed immediately after the due date. 4% of the unpaid tax, if not paid within 7 days from the due date. of the unpaid tax, if not paid within 7 days from the due date. 1% of the unpaid tax, imposed daily after the lapse of 7 days from the due date, up to a maximum of 300% of the unpaid tax amount. Source: Cabinet Decision No. (49) of 2021 amending Administrative Penalties Errors in VAT Return Calculation / Voluntary Disclosure : Despite best efforts, errors can occur in VAT return calculations. Common Error: Understating Output VAT or overstating Input VAT, which results in an incorrect net tax liability. Businesses might also fail to promptly make a 'Voluntary Disclosure' when they discover such errors. Understating Output VAT or overstating Input VAT, which results in an incorrect net tax liability. Businesses might also fail to promptly make a 'Voluntary Disclosure' when they discover such errors. Consequence (Penalty): If an incorrect tax return results in an underpayment of tax, a fixed penalty of AED 1,000 (first time) or AED 2,000 (repetition) is imposed. Additionally, there's a proportional penalty on the tax difference: 5% of the tax difference if the error is voluntarily disclosed before FTA notification. 50% of the tax difference if the FTA discovers the error before the taxable person makes a voluntary disclosure. Higher penalties apply if the disclosure or discovery is made after the tax audit notification. If an incorrect tax return results in an underpayment of tax, a fixed penalty of (first time) or (repetition) is imposed. Additionally, there's a on the tax difference: Source: [Tax Procedures Law, Article (10)], Cabinet Decision No. (40) of 2017 on Administrative Penalties , Cabinet Decision No. (49) of 2021 amending Administrative Penalties Navigating Penalties and Staying Compliant Understanding the specific administrative penalties is crucial for appreciating the financial risks of non-compliance. The FTA's penalty regime, detailed in Cabinet Decision No. (40) of 2017 and its amendment No. (49) of 2021, aims to encourage accurate and timely compliance. Understanding Administrative Penalties: These penalties are designed to deter non-compliance and ensure the smooth functioning of the tax system. They range from fixed amounts for procedural errors (like late registration or failure to keep records) to percentage-based penalties on the amount of tax understated or paid late. Redetermination of Administrative Penalties: In certain circumstances, businesses may apply to the FTA for a redetermination of administrative penalties, particularly if they have valid reasons for non-compliance. This process is governed by specific rules and criteria. Proactive Compliance Best Practices To avoid the common pitfalls and associated penalties, Dubai businesses should adopt a proactive and systematic approach to VAT compliance: Dedicated VAT Team or Expert: Designate an in-house finance team member with specific VAT knowledge, or consider outsourcing your VAT compliance to a reputable, FTA-registered tax agent or consultant. Their expertise can be invaluable in navigating complex regulations. Continuous Education and Training: The VAT landscape can evolve. Stay updated with the latest FTA announcements, guides, public clarifications, and amendments to the tax laws and executive regulations. Ensure your internal teams receive regular training on VAT compliance requirements relevant to their roles. Robust Accounting Software and Systems: Invest in and utilize VAT-compliant accounting or ERP software. Such systems can automate VAT calculations, streamline invoice generation, assist in proper record-keeping, and simplify the preparation of VAT returns, significantly reducing the risk of manual errors. Implement Strong Internal Controls & Regular Audits: Establish clear internal controls and processes for all VAT-related activities, from invoicing and expense recording to return preparation. Conduct regular internal reviews or mini-audits to identify and rectify errors proactively before they are flagged by the FTA. Prioritize Proper Documentation: Embrace the "document, document, document" principle. Ensure every transaction has proper supporting documentation, especially valid tax invoices for both sales and purchases. Organize these records systematically for easy retrieval during audits. Adhere Strictly to Deadlines: Place significant emphasis on adhering to all deadlines for VAT registration, return filing, and payment. Set up internal calendars and automated reminders well in advance of due dates. Effective cash flow management is crucial to ensure funds are available for timely VAT payments. Prompt Voluntary Disclosures: If you discover an error in a previously submitted VAT return or assessment that resulted in an underpayment of tax, do not delay. Promptly submit a 'Voluntary Disclosure' through the EmaraTax portal. While penalties may still apply, they are significantly lower than if the FTA discovers the error first. Seek Professional Tax Advice: When in doubt about the VAT treatment of specific transactions, complex business models, or new ventures, always seek advice from an FTA-registered tax agent or reputable tax consultancy firm. Their expert guidance can prevent costly mistakes. VAT compliance in Dubai is an ongoing journey that demands continuous diligence, accuracy, and a thorough understanding of the Federal Tax Authority's regulations. It is not a one-time task but a consistent commitment that must be embedded into the core operations of every business. By proactively addressing the common mistakes outlined in this guide, businesses can effectively avoid significant financial penalties, enhance their credibility, and ensure smooth, uninterrupted operations. Prioritise VAT diligence, stay informed, and seek expert advice when needed, to secure your business's future in Dubai. Also Read: UAE Updates VAT Rules with New Exemptions and Simplified Procedures The UAE Cabinet has approved Decision No. 100 of 2024, amending certain provisions of the Executive Regulations of Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT), as announced by the Ministry of Finance. Corporate Tax for Enterprises in the UAE: Recent Changes to CT Rules We tell you everything you need to know about the UAE corporate tax and how it applies to enterprises in Dubai and the UAE. Guide to Taxes in the UAE: VAT, Excise Tax, Tourist Tax & More Here's a handy guide to the different taxes in the UAE! Find out all about VAT, Excise Tax, Tourist Tax, and Corporate Tax in the UAE. How Good is AI at Drafting Legal Documents? A growing number of firms are now using AI to assist with various tasks, from research to document review. But how good is AI at drafting legal documents? Read More.
