The UAE’s Federal Tax Authority (FTA) has started to issue provisional tax registration numbers (TRNs) to businesses that commenced registration after the December 4 deadline, in order to help achieve tax compliance ahead of VAT implementation on January 1. Businesses that fail to register with the FTA will face a penalty of Dh20,000.
The FTA said it had already issued provisional TRNs for tax groups and will provide the same for individual businesses shortly. “Having a tax registration number is a mandatory requirement to mention on invoices as it would enable businesses to claim credits. Having obtained the TRN, businesses can now configure their IT system to mention it on all tax documents from January 1,” said Nirav Shah, director, Fame Advisory.
“Businesses can now communicate the same to their suppliers, vendors and customers so when they raise invoices it would include the TRN on all tax documents and thus allow businesses to claim credit of taxes paid,” he said.
According to Shah, the first step towards compliance is having a TRN number and hence its issuance even on a provisional basis is a step in the right direction.
According to Naveen Sharma, chairman of the Institute of Chartered Accountants of India, VAT is being implemented in UAE from January 1, 2018, but not all businesses have received the TRN.
“Moreover, a lot of businesses have not submitted correct documents for registration. As hardly 8 days are left, FTA has come out with provisional tax registration, which will ensure the continuity of business from January 1, 2018. The main reason behind FTA’s move is to ensure that there is no interruption in business,” said Sharma.
He noted that this business-friendly move by the FTA will boost the confidence of the business community, because some are worried about not receiving TRN numbers and some others are worried about the fact that they could not provide correct documents at the time of initial registration.
“As registration opened in the last quarter of this year, almost all have applied for registration for the first time because VAT is new to everyone in the UAE. Some businesses made genuine mistakes because of their ignorance. FTA’s move to provide provisional tax registration numbers will give them another opportunity to complete their registration without any fear,” he concluded.
The Federal Tax Authority also called on businesses to verify the data that is entered in the application form, carefully review the form and ensure its flawlessness before submitting, as faulty data could lead to the rejection of the application.