VAT return filing in UAE

VAT Return Filing in UAE: A Guide

The UAE implemented Value Added Tax (VAT) on January 1st, 2018. Each stage of the supply chain is subject to the transaction-based indirect tax referred to as VAT. Since customers endure VAT, it is a consumption tax. By registering your company under UAE VAT law, the government has acknowledged your company.

VAT burdens are not undertaken by businesses. The VAT liability amount that taxable individuals pay to other taxable individuals on business activity purchases can be abstracted fractionally through a system of deductions.

What is the Importance of VAT?

According to experts, the UAE's economy and business owners will benefit long-term from the implementation of VAT. The following are some of the key factors that make VAT registration in Dubai important:

• It improves brand equity
• expands market opportunities
• saves needless fines
• enables claiming VAT refunds

What is VAT Return Filing?

A VAT return filing is a formal declaration that must be made to the Federal Tax Authority on the VAT paid on taxable goods and services for a certain period. To comply with the FTA laws and regulations, businesses are required to submit a VAT return. Along with other information, it should provide specifics about any output taxes that are owed and recoverable input taxes.

Any taxable person or any other person who has the requisite authority to do so can submit the returns. While quarterly filing is an option for VAT returns, some companies must submit the returns every month. A VAT return summarizes the value of the supplies and purchases a taxable person made during the tax period and provides their VAT liability.

What are the steps for filing VAT Returns?

1. Have an FTA account

A VAT-registered business entity in the UAE needs to have a Federal Tax Authority account (FTA). The account is necessary to start the procedure. To ensure that all the information submitted to the tax office is accurate, it is recommended to contact a licensed tax agent in the UAE to create an FTA account.

2. Provide the FTA with information about the taxable person.

A company that has registered for VAT is referred to as a taxable person in this situation. To complete VAT returns, it is crucial to provide precise details on the tax period. Since it enables companies to recoup VAT-related expenses incurred during a specific tax year or term, it is crucial for all enterprises.

3. Specify the details of all VAT sales, expenses, and other inputs.

The FTA must receive the essential data regarding the VAT sales and expenses that a company incurred in a single fiscal year. It is necessary to include information about exempt supplies and zero-rated supplies among other things. It is also necessary to give any specifics regarding expenses that are made at the current VAT rate of 5%.

4. State calculations regarding net VAT due to the FTA

Following the submission of the information regarding VAT sales, expenses, and other relevant inputs, calculations of the net VAT owed by the company must be made. The tax authority must receive payment for the overpayment of VAT that exceeds the amount that can be recovered.

If the amount that can be recovered exceeds the amount that must be paid to the FTA, the difference may be returned to the business through the VAT refund or reclaim process. The computation that must be given to the FTA is an estimate of the business's payable tax for each tax period.

5. Provide a Declaration

A declaration certifying the authenticity of all information provided to the FTA must be supplied for the last step of the return filing procedure. Providing misleading info may result in thousands of dirhams in fines. Hiring a tax consultant or licensed tax agent in Dubai is one way to avoid accruing a large number of fines and penalties. 

What is the deadline for VAT Return filing in UAE?

Regularly filing a VAT return is obligatory if you operate a taxable business. Most businesses file returns within 28 days, or roughly 4 weeks before the tax season closes (period as defined by the FTA for every type of business). The filing of VAT returns must be done during one of two standard tax periods:

• Quarterly for businesses that have an annual turnover of less than AED 150 million.
• Monthly for businesses with having annual turnover of more than AED 150 million.

Determining a tax period for a business, though, is up to FTA. A different tax period may be established by the authorities for particular types of businesses. This regulation was put in place to lower the possibility of tax evasion and improve business oversight.

Consider a scenario when the deadline for filing or paying a VAT return comes on a weekend or a holiday. Then, the deadline for submitting a VAT return or making a payment is the day after the next business day.

How outsourcing VAT filing services can help the business?

By VAT return filing, VAT consultants can help and support you:

• Monthly or quarterly visits from VAT specialists will be made to your business to collect and prepare the financial data needed to submit the VAT Return.
• A thorough audit of the financial records and periodic document upkeep to establish VAT compliance
• If the FTA officials conduct a VAT audit, the VAT experts will be available to represent your business. if necessary
• Ensure that your firm complies with VAT regulations and is required to do so by FTA.
• Preparing the VAT return on your behalf according to the FTA rules and regulations after each VAT return period.
• Ensure that the VAT returns are submitted within the allotted time for each tax period
• They will examine all VAT-related operations to make sure that the VAT charged by the supplier is legitimately claimed and that the VAT-related amount is charged on sales as output tax.
• To maintain compliance and prevent hefty VAT fines and penalties from FTA, they will offer advice and opinions based on the most recent changes and trends in VAT.