VAT return what it is
VAT return is the document prepared and submitted by the taxable person at regular intervals providing information as to input tax recoverable, output tax due, and any other information that the taxable person is required to provide.
Tax period for VAT filing in UAE
A taxable business is required to file VAT return with FTA regularly within 28 days of the end of the tax period as prescribed for each type of business. A tax period is a specified period for which tax payable shall be calculated and paid. The standard tax period, as per UAE VAT Law, depends on the annual turnover of a business.
- Businesses with a turnover below AED 150 million shall file a quarterly VAT return
- Businesses with a turnover exceeding AED 150 million shall file a monthly VAT return
FTA is empowered to assign a different tax period to certain types of businesses. If a taxable person files a late VAT return, then he will be liable to administrative penalties for violations of VAT laws in the UAE.
|Tax Period||Due Date for Filing VAT Return|
|1st January 2020 to 31st January 2020||28th February 2020|
|1st January 2020 to 31st March 2020||28th April 2020|
If the VAT return filing or VAT payment due date happens to fall on a weekend or a national holiday, then the deadline to file VAT return or making a payment becomes the immediately following business day.
How to file VAT Return in UAE
A taxable person should prepare VAT return well in advance as he is required to file VAT return online in the form named as ‘VAT 201’ on the FTA portal. Currently, there is no facility available on the FTA portal to file tax return offline in XML or xls or xlsx format. The taxable person must fill up the VAT 201 form correctly and provide information as to sales, purchase, input VAT and output VAT, etc. There are seven sections, as mentioned below in the VAT 201 form:
VAT Return Filing Steps
1. Taxable Person details
Information as to Tax Registration Number / TRN of the taxable person and contact information. If a Tax Agent is submitting the tax return on behalf of the taxable person, then the information about Tax Agent Approval Number / TAAN) and Tax Agency Number / TAN along with the Tax Agent name and Tax Agency name gets automatically populated.
2. Value Added Tax return period
Information as to VAT Return Period, VAT Return Due Date, Tax Year-End, and VAT Return Period Reference Number.
3. VAT on sales and all other outputs
In this section of VAT Return, the taxable person has to provide information as to standard rated tax supplies in different emirates including Abu Dhabi, Dubai, Sharjah, Ajman, Umm al Quwain, Ras Al Khaimah, and Fujairah. Further, detail as to tax refunds provided to tourists under the Tax Refunds for Tourists Scheme should be provided. It is also necessary to provide information as to exempt supplies, zero-rated supplies, goods imported into the UAE, and adjustments to goods imported into the UAE.
4. VAT on expenses and all other inputs
In this section of Tax Return, you have to furnish information on standard rated expenses, and supplies subject to reverse charge provisions.
5. Net VAT due
This section requires furnishing information on the total value of due tax for the period, the total value of recoverable tax for the period, and payable tax for the period.
6. Additional reporting requirements
Additional reporting requirements are only applicable to taxable persons who have applied the provisions of the Profit Margin Scheme during the taxable period. Others may simply say tick ‘No’ and skip to the next section.
7. Declaration and authorized signatory
This section requires the taxable person to declare that information provided in the VAT return is factually correct, accurate, and complete to the best of his knowledge. Hence, utmost care should be taken while preparing the VAT filing. The taxable person has an option to save the draft tax return and submit it later.
Once the taxable person is satisfied as to the submitted information in the VAT Return, he can click on the Submit button and file the VAT return.
Care to be taken while filing a Tax return
- Fill up information for all mandatory fields
- Do not leave the amount fields empty. Enter ‘0’ if there’s nothing to declare.
- Make sure to enter all the amounts in United Arab Emirates Dirham (AED) up to two decimal places
- Double-check the accuracy and completeness of the information provided to avoid fines and penalties. You may use our UAE VAT Calculator to calculate VAT on Invoices.
Penalties related to VAT Return
- If the taxable person fails to submit the VAT return within the specified timeframe, then he has to pay a penalty of AED 1000 for the first time and AED 2000 in case of a repeated failure within 24 months.
- If the taxable person fails to
settle Payable Tax as per the VAT return or Tax Assessment within the timeframe
- 2% of the unpaid tax becomes due immediately
- 4% of the unpaid tax becomes due on the 7th day following the deadline for payment
- 1% daily penalty is charged on any amount that is still unpaid one calendar month following the deadline for payment subject to a maximum of 300%.
- If the taxable person files an
incorrect tax return then,
- A fixed penalty of AED 3000 for the first time and AED 5000 in case of a repeated failure
- 50% if the taxable person fails to make a voluntary disclosure or makes the voluntary disclosure after he is notified of the tax audit and the tax authority starts the tax audit process or after being asked for information relating to the tax audit whichever takes place first
- 30% if the taxable person makes the voluntary disclosure after being notified of the tax audit and before the authority starts the tax audit
- 5% if the taxable person makes a voluntary disclosure before being notified of the tax audit by the authority
- If the legal representative for the taxable person fails to file a VAT return within the specified time, then the legal representative has to bear the penalties of AED 1000 for the first such failure and AED 2000 in case of repetition within 24 months.
As per the UAE VAT Laws, there is no such relaxation for filing VAT return. All VAT registered companies need to submit quarterly VAT returns on the 28th of the following month.
(i) One can settle Payable Tax using e-dirham or credit card (Visa and Master card only)
(ii)Another option available is payment via e-debit. Here the payment is processed using retail or corporate banking channels of the taxpayer.
(iii)One can also make a fund transfer via GIBAN number as provided by the FTA.
Yes, one can file VAT return without settling the payable tax, but he can not escape the late payment penalties.
UAE VAT Laws require a taxable person to file his tax return and settle the payable tax on time. If one fails to submit his VAT return on time, then he will be charged penalties.
You need to file a Voluntary Disclosure in Voluntary Disclosure Form 211 to correct the mistakes if the net impact of VAT Payable or VAT Receivable is more than AED 10000. If the net impact of such a mistake is less than AED 10000, then you are not required to submit the Voluntary Disclosure Form. You can correct such mistakes or omissions in the subsequent VAT return.
Yes, one can generate a VAT return file, and file VAT Return with the FTA if the software is certified by the FTA.
VAT Consulting Service in UAE
N R Doshi & Partners provides a range of tax services, including VAT return filing services, VAT Consulting, and Tax Agent services in the UAE. Our service is coupled with insight and domain knowledge to help businesses remain compliant with the UAE Tax Laws. Contact us to know how our VAT Consultants in UAE can make you fully VAT compliant.