THINGS TO KNOW for VAT Return filing in UAE

VAT Return filing in uae

 What is a VAT Return?

• VAT Return/Tax Return is a periodical statement which summarises the value of the supplies and purchases made by a taxable person during the tax period and shows the taxable person’s VAT liability (difference between the output tax payable and the input tax recoverable) which is submitted to the FTA (Federal Tax Authority).
• VAT Return is required to be filed by the taxable individual or the individual having the authority to submit VAT Return filing in uae on behalf of the taxable individual (i.e., Tax Agent)

Purpose of Filing VAT Return filing in uae

The major purposes of filing a VAT return are:

• Communication of tax information to FTA.
• Finalization of the tax liabilities, schedule tax payments/request refund for overpayment of taxes of the taxpayer within the stipulated period.
• Reduces the risk of tax evasion.

 

What is a TAX Period?

• Tax period is a specific period for which the taxable person shall calculate and pay tax. 
• The standard UAE VAT return filing period is on a quarterly basis. However, , the Authority may assign a Person or class of Persons a shorter or longer Tax Period where it considers that a nonstandard Tax Period length is necessary or beneficial to reduce the risk of Tax Evasion and to improve the monitoring of compliance adherence by these businesses
• At the time of allotment of TRN the Authority has specified the tax period for each Taxpayer.

VAT Return Filing Due Date

• The due date to file any UAE VAT return, be it monthly or quarterly, is the 28th day of the month following the end of the tax period. 
• If the due date falls on a public holiday, the due date for filing a return shall be extended to first business day thereafter.
• If there is no business transaction for the tax period, the taxable person is still required to submit a “nil” VAT Return by the respective due date.

Where to file the VAT return?

• • VAT return must be filed electronically through the FTA portal: eservices.tax.gov.ae.

• A taxable person can login to the FTA portal using their registered username and password. In the portal, UAE VAT Return form can be accessed from the “VAT” tab on the navigation bar 

Components of a VAT return form

• The VAT return form in UAE is to be filed on a summary level i.e., the businesses are required to submit the consolidated details such as total sales, total purchases, output VAT, input VAT and tax payable.
• The VAT return form is generally categorized into seven sectors:
  • VAT Return Period
  • Taxable Person Details
  • Net VAT Due
  • VAT on sales and all other outputs
  • VAT on expenses and all other inputs
  • Declaration and Authorized Signatory
  • Additional reporting requirements
• There is also an additional reporting section, which applies only to certain businesses under specific conditions. This section contains fields related to the profit margin scheme, stock transfers, and VAT paid in other implementing states.

Additional things to keep in mind while filing the VAT return

• Insert all amounts in United Arab Emirates Dirhams (AED)

• Insert all amounts to the nearest fils (the form allows for two decimal places)

• Complete all mandatory fields.

• Use “0” where necessary and where there are no amounts to be declared.

Penalty for non-filing of return

• • Failure to file the VAT Return within the specified time frame will make the registered person liable for fines as per the provisions of Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE. 

• The failure of the Registrant to submit the Tax Return within the timeframe specified in the Tax Law attracts a fine of AED 1,000 for the first time and penalty increases to AED 2000 in case of repetition within (24) months.

VAT rules for correcting the error in VAT Return filing in uae

• UAE VAT law permits correction of errors made in previous return period. 
• The taxable person must disclose the error to the FTA within 30 days of becoming aware of the error and include in the Tax Return to be submitted immediately after noticing and correcting the error. 
• Errors in calculation of payable tax of above AED 10,000 should be reported under the Voluntary Disclosure Scheme; however, errors in calculation of payable tax of not more than AED 10,000 can be corrected in the subsequent tax return.

 

Conclusion

• Filing VAT return under the VAT regime is crucial as non-compliance and delay will result in penalties and affect your timely refunds
• In order to submit the Vat Return, there is a requirement of an accurate summary of sales, purchase/ expenditures, output VAT and input VAT. To achieve this, taxable businesses should keep their books in a well-organized manner. Our team of expert VAT consultants at Accountants Box can assist you with VAT accounting and VAT return filing. For information, you could reach us at info@accountantsbox.com.