According to the law stated by the Federal Tax Authority (FTA) portal, business entities in UAE are required to file VAT returns. Value Added Tax, known as VAT, is implemented in UAE from Jan 1st, 2018. The bottom line of VAT in UAE is to submit a VAT report to the FTA during tax submission; the documents required to submit a VAT report are called VAT Return whereas the process is defined as VAT Return Submission. In order to submit the VAT Return filing, taxable businesses should keep their books in a well-organized manner to avoid penalties. VAT Return is filed by the taxable individual or the individual having the authority to submit VAT Return filing on behalf of the taxable individual.
Under VAT in UAE, the businesses are classified into many groups based upon their size. Therefore, the first VAT Return was filed in Feb followed by March, April till June 2018. Business entities can file their VAT returns online using the Federal Tax Authority (FTA) portal. The online FTA portal is purposefully designed to accept VAT returns using the online mode until further information. It is necessary for the taxpayer to provide information like values of Sales, Purchase, Input VAT, Output VAT, etc. while filling the VAT Return form in the FTA portal.
There is a form, known as ‘VAT 201’ available on the FTA portal required to be submitted. The ‘VAT 201’ Form is generally categorized into seven sectors listed below:
There is another form known as ‘VAT Voluntary Disclosure Form 211’ available on the FTA portal; it is to be filled under specific situations.
Every section comprises of various boxes wherein the information is to be furnished by the taxpayer to complete the VAT Tax return filing. The information necessary to be filled in relevant boxes of the Vat Return Form 201 are discussed below:
The taxpayers must log in to the FTA e-Services portal using their registered credentials (username and password) for accessing the VAT Return Form 201. To initiate the VAT return filing process, click on the ‘VAT 201- New VAT Return’ many sections of the VAT return form will open. Here is the procedure for filing the VAT Tax return:
Details such as Tax Registration Number (TRN) of the taxpayer, name, and address of taxpayer gets automatically populated. If a tax agent submits the VAT return on behalf of a taxpayer, the details of Tax Agent Approval Number (TAAN) and the associated Tax Agency Number (TAN) along with the Tax Agent and the Tax Agency name gets automatically populated at the top of the VAT Return.
As per the VAT registration threshold, the registration is classified as mandatory VAT registration, voluntary VAT registration, and exemption VAT registration. Not all the business entities require getting VAT registered; it is required for businesses to get VAT registered if the value of their taxable supplies exceeds AED 375,000 over the preceding 12-month period or is estimated to exceed that threshold in the next 30 days. A majority of the businesses in UAE have to file the VAT Returns on a quarterly basis whereas a certain class of businesses can file VAT returns on a monthly basis.
The details furnished in the VAT Return Form 201, the Tax Year-end, VAT return period reference number and VAT return due date gets auto-populated. The tax year-end plays a significant role for businesses that are unable to recover their input VAT and require performing an input tax apportionment annual adjustment. Such adjustment is applicable in the first VAT return only following the tax year-end. VAT return period reference number represents the VAT return period which you will be completed within that tax year. If the VAT return period reference is 1, Business entities whose VAT return period reference is 1 must include their input tax apportionment annual adjustment in the VAT return.
Below listed are the steps that should be taken care of before filing VAT Return:
Post VAT Filing, the information in the VAT Return Form, the net amount payable gets automatically calculated. In a case where the payable value is negative, the taxpayer gets two options – to carry forward the amount to the next Tax period or to get a refund.
The taxpayer should submit his VAT Return to the FTA no later than 28th following the end of the Tax Period concerned or by other date stated by the FTA. Due payment to the FTA, it should be received by the FTA by the same deadline.
The title of ‘VAT201 – VAT Return’ available on the Federal Tax Authority (FTA) website indicates the VAT Return format. To obtain the format of VAT Return, individuals have to log in to the E-services portal of FTA by using registered credentials (e-mail and password).
Due to late VAT Returns filing, a penalty of AED 1,000 gets charged for the first time in the delay of the VAT Return submission and penalty increases if the delay in VAT Return filing occurs again. There is a set procedure in an official manner for VAT return filing in the UAE.
To file VAT return in UAE, there is a requirement of an accurate summary of details, Purchase/ Expenditures, the detailed VAT working of Sales, output VAT and input VAT. This must be ensured that the information produces a precise summary of figures to be integrated into the required VAT Return format as prescribed by the FTA. It is mandatory for VAT registered businesses to submit a ‘VAT return’ to the Federal Tax Authority (FTA) at the end of each tax period. A VAT return filing summarizes the total value of supplies and purchases a taxpayer has made during the tax period and demonstrates the liability of the taxpayer.