VAT for Construction Companies

Tax fines for construction sector in Dubai

Tax Errors and Fines for Construction Sector

VAT for construction companies is a complicated subject. The construction sector will be included in the VAT regulations and will attract the Standard rate of 5% VAT. Companies in the construction sector need to plan in advance due to the long-term of their projects. There are complications in VAT for construction companies which results in tax errors and fines for the construction sector in Dubai – UAE.

All the businesses in the construction industry of UAE are now demanding invoices as everyone wants to clear all their pending invoices before the year ends. After the announcement from Federal Tax Authority (FTA) all the construction sector businesses are following the same pattern.

Most of the contractors are putting an official statement in their contracts or agreements that the clients are liable to pay any VAT applied to anything related to their services, except for their service fees. UAE is witnessing a huge number of construction projects and plans because of the upcoming Expo 2020.

UAE’s construction industry is making a lot of mistakes while handling its tax issues. As a result of the mistakes they are getting heavy VAT fines and penalties from the Federal Tax Authority (FTA) and this is actually impacting their businesses. UAE’s Construction sector companies should avoid making common mistakes by hiring Registered Tax Agents from the FTA in order to run their businesses smoothly. Construction companies in UAE are making the following errors:

Common errors/Non-compliance of FTA Law

  • Issued invoices different from FTA Prescribed format (That mistake may lead to a 5,000 AED fine)
  • Wrong VAT treatment for Retention
  • Wrong treatment for Transport services for staff/labors
  • Provide wrong figures in previously filed returns (If the difference is more than AED 10,000 VAT then it needs to be adjusted in the same quarter), if those errors find by FTA Assessor then the minimum fine will be AED 30,000
Read more about VAT Fines and Penalties in UAE!

Tax Agent Services

Managers/Decision makers should take the Tax Agent services and should not be worried about VAT as currently instead of putting efforts into business growth, they are stuck in VAT-related operational matters. So due to this, they are spending their valuable time on VAT-related issues, and profitability decreases.

As we are accredited tax agents so we are also providing Tax agent services, where we are taking the responsibility regarding VAT from the client to our shoulders, we are taking care of all VAT services in Dubai UAE-related matters for the previous year and the current year. Feel free to contact us now!


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