WTS Dhruva Consultants, part of tax and regulatory services organization Dhruva Advisors LLP, issued a report analyzing VAT implications on shipping and logistics sector of the UAE.
Often, due to voluminous transactions, the authenticity of the tax data gets compromised and is not properly reviewed, the report reads.
An urgent matter is to allocate adequate budgets to the implementation of a robust IT infrastructure in order to support VAT compliance.
It is imperative that Management not only ensures that the correct VAT treatment is applied on their supplies, but also that this treatment is reflected in the VAT returns.
While there are certain transactions whereby the position may differ amongst industry players (due to lack of clarity, etc.) and in such a scenario, it is advisable to seek clarification from FTA at the earliest possible time.
If the response from FTA is different, i.e., taxable or exempt, in comparison to the tax position taken by the company for past transactions, this change would impact previous VAT returns and payments, and would lead to penal consequences.
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