- February 13, 2018
- Posted by: Shuraa Tax Consultant
- Categories: UAE Taxation, VAT - Value Added Tax in UAE
To file VAT returns in UAE is an important obligation for businesses operating in the United Arab Emirates (UAE). As a progressive and modern country, the UAE has implemented a tax system that aligns with international standards. Therefore, the UAE introduced its tax system to diversify its revenue streams and support its economic growth. In this blog, we will learn about VAT returns in UAE in detail.
First, it is important to note that tax returns must be filed annually by all businesses that meet the UAE’s tax registration threshold. Currently, the authorities have set the VAT registration threshold at AED 375,000 per annum. Failure to file tax returns or comply with the country’s tax laws may result in penalties and fines. The UAE has designed its tax system to be simple and easy to understand.
Moreover, it is based on the value-added tax (VAT) model, which levies a consumption tax on the value added to goods and services at each stage of the supply chain. Businesses in the UAE must maintain proper accounting records and keep track of their tax obligations. This involves recording all taxable transactions and issuing VAT invoices accurately. Keeping track of tax obligations ensures that businesses comply with the UAE’s tax laws and regulations.
Businesses must also ensure that they are aware of any changes to the country’s tax laws and regulations. The UAE’s Federal Tax Authority (FTA) regularly updates its website with information about new tax laws, regulations, and procedures. It is important to comply with the country’s tax laws and regulations to avoid penalties and fines. It is advisable for businesses to regularly check the website of the FTA (Federal Tax Authority) to stay updated on any changes to the reporting requirements.
What is a Tax Return?
Tax Return in UAE is an e-document that businesses and individuals submit to the Federal Tax Authority (FTA). The e-document shows their income, expenses, and other financial information for a specific period. When the tax period ends, businesses and individuals are required to file their VAT returns in UAE with the FTA.
Tax returns need to provide accurate and complete information, including any deductions and exemptions they are eligible for. Furthermore, to file their tax returns, businesses and individuals can use the FTA’s online portal. They need to create an account, fill out the required forms, and submit the information.
The FTA will review the tax returns and assess any taxes owed or refunds due. It is important for businesses and individuals to file their tax returns on time to avoid penalties and fines. They should also keep all their financial records and receipts in case of an audit by the FTA.
In the UAE, each VAT enrolled taxpayer must create and submit a VAT return once per tax period. Depending on the instructions provided by the FTA on your VAT certificate, the tax filing term is either a month or a quarter (3 months).
Important dates for VAT Return Filing in UAE
To file VAT returns in UAE, it’s crucial to be aware of the deadlines. The deadline to file monthly or quarterly VAT returns is always the 28th day of the month following the end of the VAT return period. The due date will be next business day, if the 28th days falls on a public holiday or weekend. For instance, if you’re submitting a quarterly VAT return for the period between February to April, you need to file it by May 28th.
If your first tax period falls between January 1, 2022, and Jan 31, 2022, you must file your VAT return on or before February 28, 2022 (or the next business day if February 28 falls on a public holiday or weekend).
However, in some cases, a business’s first tax period may exceed three months. For example, if your first tax period falls between January 1, 2022, and April 30, 2022, you must file your VAT return on or before May 28, 2022 (or the next business day if May 28 falls on a public holiday or weekend).
How to file VAT return?
Here are some of the easy steps of filing VAT return in UAE: –
Visit the Portal
You must file for tax return electronically through the FTA portal: eservices.tax.gov.ae. Before filing the VAT return form on the portal, make sure you have met all tax returns requirements.
Log in FTA Portal
Furthermore, the next step is to log in to the FTA service portal. Simply use your unique Username and password to access the portal. After entering your credentials, the system will direct you to your personal dashboard which comprises all the essential features and options needed for your VAT return application. Moreover, the FTA portal is designed to be user-friendly, so you will not encounter any difficulties in logging in or navigating through the portal. Once you login click on the view tab next to your Company name.
Fill the VAT Form
Next step is to select the ‘VAT’ tab from left side list and click on ‘My fillings’ and to proceed to fill out the VAT return form by providing all the necessary details that are requested. The form will typically ask for information regarding your business transactions and tax liability. Be sure to include all your sales and outputs emirates-wise, as well as your expenses and input VAT
Submit the Form
The final step is to submit your filled VAT form after thoroughly reviewing it to ensure there are no errors. Take your time to review the form carefully, double-checking all the details, including your business information, transactions, tax liability. Furthermore, after filling out the form and uploading the required documents, it’s important to review the form once again.
The VAT Returns in UAE Contents
The following two sections are in a VAT return in UAE: –
- The first section is the main section, which includes the taxpayer’s details, sales, purchases, and net VAT due. Moreover, the main section is mandatory for all VAT-registered businesses in UAE.
- The second section is the additional reporting requirements section, which only applies to certain businesses under specific conditions. Furthermore, this section includes fields related to the profit margin scheme.
When you file VAT returns in UAE, the main section contains all the necessary details pre-populated with the taxpayer’s data, including the tax year-end VAT stagger, tax form filing type, and submission date. In a UAE VAT return, the section that captures the taxpayer’s information is called Taxable Person Details.
This section includes the Tax Registration Number (TRN), name of the business in both English and Arabic, registered address or place of residence of the business,
VAT on Sales and all other Outputs
The VAT on Sales and all other Outputs section of the VAT return should contain details of all sales and supplies made by the taxpayer during the tax period.
- The first column is for the total sales transaction amount which includes sum of sales value due to debit or credit notes. The second value is the VAT amount that has been collected, which also includes any changes to the VAT collected due to changes in the taxable value captured in the previous column.
- Finally, the third value shows any adjustments made to output tax or VAT collected during the earlier tax period.
VAT on Expenses and all other Inputs
This series of sections present information on all VAT on purchases and expenses made during the tax period.
- The total vatable business purchase amount is based on purchase invoices, which include any adjustments due to debit or credit notes from suppliers or corrections from previous tax periods.
- The Recoverable VAT Amount, or the number of VAT refunds that can be claimed according to VAT law.
- Any adjustments made to the input tax (VAT paid on purchases)
Net VAT Due
Calculating the net VAT due is crucial in determining the amount of VAT a taxpayer owes to the government. To calculate the net VAT due, the total recoverable VAT is subtracted from the total output VAT payable. Furthermore, if the output VAT payable is higher than the recoverable VAT, the difference is the net VAT due, and you will need to make a payment to the government.
The government may refund or carry forward a VAT credit to future VAT periods if their recoverable VAT is higher than the output VAT payable. This section helps to ensure that businesses accurately report and pay their VAT obligations in accordance with the law.
Additional Reporting Requirements
To comply with tax regulations, businesses that sell secondhand goods and have enrolled in the profit margin scheme must complete this section. They need to select “yes” to indicate their enrollment under the scheme, which applies VAT only to the profit made during sales of secondhand products.
Overall, VAT return filing in Dubai is a legal requirement that registered individuals and businesses must comply with. This process is carried out quarterly or monthly and requires individuals and companies to report their income and vatable expenses to the Federal Tax Authority (FTA).
Firstly, it is important to understand the different tax laws and regulations in Dubai, including the VAT and excise tax laws. Secondly, taxpayers should maintain proper records and documents to facilitate the filing process. Furthermore, taxpayers should ensure that they file their tax returns on time to avoid penalties and fines. Additionally, taxpayers should seek the advice of tax experts to ensure compliance with tax laws and regulations.
In conclusion, complying with the tax laws and regulations in Dubai is crucial, as failure to do so may result in legal consequences. Therefore, it is important for individuals and businesses to stay informed and take the necessary steps to file their tax returns accurately and on time.