- Extended time for a Tax Audit
In general, a monthly or quarterly tax audit cannot be carried out more than five years after the end of the tax period in question. The actual audit can, however, be done and/or finished within the next 4 years of the taxpayer receiving notice that a tax audit has begun within those 5 years.
- Tax audit after Voluntary Disclosure
If a voluntary disclosure for a monthly or quarterly tax period is made in the fifth year following that tax period, the FTA will have an extra year to perform a tax audit. The extra period will essentially guarantee that FTA has enough time to process the voluntary disclosure and carry out further audits in response to such disclosures.
- Tax Evasion
In a case of tax evasions, a tax audit can be conducted with 15 years from the end of the tax period in which the tax evasion occurred. A person who uses illegal methods to reduce the amount of tax due, avoid paying it, or gain a tax refund when they are not qualified is said to be engaging in tax evasion, whether they are registered or not.
- Failure to obtain VAT registration
Many people think that if they don’t register for VAT, the tax authorities won’t find out about them. Within 15 years after the date on which they should have been registered, the FTA may undertake a tax audit if a person fails to get a tax registration.
- Good news for 100% exporters
In the same Tax Conversation, we also covered how 100% of a company’s supplies are zero-rated and how the law does not require the business owners to bear the cost of ongoing VAT compliance. The opportunity to obtain an exemption from VAT registration is available to such enterprises. Companies that were already registered for VAT but were unaware of this advantageous offer were still had to comply with periodic VAT requirements.
Businesses that have registered for VAT may also request an exclusion from registration beginning on January 1, 2023.
- Additional compliance for input credit on import of service
Many businesses pay for services to the overseas service providers on the basis of agreements without requiring the service providers to issue an invoice. Since the VAT laws have recently changed, the taxpayer can only claim input credit for services imported provided they receive and keep the invoices in line with the VAT laws.
- Construction sector and retention payments
VAT may still become due if more than a year passes between successive milestones of delivery of goods or services and retention payment claims.
A new particular date of supply has been added for VAT purposes, which is one year from the date the goods or services were given.
- Deemed supplies to related parties
Under the previous laws, deemed supplies, such as the free (FOC) delivery of products to related parties, might have resulted in a VAT liability.
According to the revised VAT laws, if the recipient company is otherwise qualified to receive 100% input credit for its purchases, a corporation may not have a VAT liability on FOC goods or services to related parties.