The number of companies registering with the Federal Tax Authority for value-added tax (VAT) will increase substantially - especially from the retail and F&B sectors - over the coming months as some of the businesses are still preparing to register for new tax regime, tax analysts said on Wednesday.
"I believe there would be more companies coming up within the next few months. Businesses are still preparing for VAT registration, and getting their accounts in order. This may take time and companies are still adjusting," said Sarra AlSamarrai, Associate at Dubai-based Fichte & Co.
Khalid Al Bustani, head of the Federal Tax Authority, said that 260,000 companies have so far registered while thousands more will register in coming months. Moreover, another 10,000 large groups have also registered with the FTA under VAT.He pointed out that around 50,000 companies applied for registration in one day in December 2017.
In 2017, Al Bustani had announced that 350,000 companies would register for VAT.Naveen Sharma, chairman, The Institute of Chartered Accountants of India (Dubai Chapter), believes that companies will register in big numbers in months to come. He expects that the companies registering for VAT could cross the 350,000 target.
"Many people who were thinking that VAT will not come, will come forward and this is happening now. Plus, people in free zones were thinking whether to register or not will also come in big numbers," Sharma said.Most of the new companies will come mainly from the retail and F&B sectors, he said, adding that small repair shops, travel agencies and online firms will also join the FTA for VAT registration.
Highlighting challenges still being faced by companies for registration, AlSamarrai noted that one of the biggest challenges companies are facing is actually assessing their taxable supplies in order to see if they should register.
"A lot of companies - especially those providing services - cannot identify their services clearly as per the tax regulations; the hardest mechanisms would be identifying the taxable supplies (whether they would be exempt or zero rated), and where the place of supply would be considered according to the VAT regulations," she added.
The FTA chief said that so far only two tax agents' applications have been approved out of hundreds of applications submitted with the authority.
"The FTA has implemented some strict screening measures for tax agents. We assume that many of the applicants have not yet met the requirements set out by the FTA which include at least three years of related work experience, a bachelor's or a master's degree in either accounting, tax or law, along with some other requirements.
"The FTA is trying to ensure the agents, who will be working as intermediaries between companies and the FTA, are highly qualified to assist taxable persons with their tax obligations," she added.
The FTA on Wednesday reported a high level of responsiveness and cooperation from the shipping, customs clearance, logistics sectors with regulations surrounding the implementation of VAT, which came into effect on January 1, 2018.
The FTA made the announcement during an introductory workshop that tackled the anticipated effects of VAT on internal and external trade in the UAE, and to discuss solutions to ensure a smooth implementation of the tax system. The workshop was attended by nearly 670 experts and stakeholders from sectors.
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