Before getting VAT registration in Abu Dhabi, you need to know a few things. This article will walk you through the process and cover common mistakes. You will also learn about the benefits of VAT registration and penalties for late payment. To get a smooth VAT registration process, follow these steps. You should register for VAT no later than December 31 of the year in which the first invoice was issued. In addition, being VAT registered will give you more opportunities to claim tax credits.
Registering for VAT:
VAT registration is not compulsory for all businesses, and many companies automatically register when there is no positive to be gained. Ideally, it would be better to get your company registered when you have already started generating a sufficient level of turnover. You’ll also get the added advantage of earning respect and recognition from other businesses and companies, so registering for VAT is not something to overlook.
Common mistakes made in the process:
When registering for VAT, many people make several mistakes. One of these is failing to regularly monitor their turnover, which means they haven’t registered for VAT until after their calendar quarter. This is a common mistake, but it can be avoided by keeping a close eye on your turnover. You should register as soon as you hit the PS85k turnover threshold, but many businesses mistake waiting until the end of the income tax year to do so.
Benefits of being VAT registered:
Having a VAT number makes your business look more professional. As a non-VAT registered company, you may get turned down by many prospective clients. It may not be easy to find customers for your products and services if you’re starting. However, having a VAT number opens up a whole host of opportunities.
Penalties for late payment of VAT:
The new VAT legislation will introduce penalties for late VAT payments and for not filing returns on time. Under the existing regime, businesses have 15 days to pay their VAT due. After this period, late filing will result in a penalty equal to 2% of the total due amount. After that, the penalty will increase to 4% per day, calculated daily. This interest will continue until the debt is paid. If the late payment results from a mistake made by the business, a time-to-pay arrangement may be applied.