Guide for VAT Return Filing UAE
By kitaab
VAT is an indirect goods and services tax that is paid by the consumer as an additional percentage of the total price. Thus, the higher the original price of the product or service, the higher the VAT amount paid.
As per the FTA, companies with a turnover over AED 375,000 have to register and file returns for VAT mandatorily meanwhile those with a turnover above AED 187,500 but less than AED 375,00 can voluntarily register and file VAT returns. It is evident that any established or growing business should be in the know of how to register and file returns.
The VAT registered companies are referred to as “taxable income” and they need to file returns at the end of every tax period. The process and expense of the process can be overwhelming.
Here’s our guide to navigating through the process of filing VAT returns-
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Learn moreRegistering and creating an account with FTA
The first step for VAT return filing for a business in the UAE is VAT registration on the online portal of FTA and creating an account by supplying all the relevant information. It has to be ensured that all the information provided is accurate and complete. It is advisable to seek help from a tax professional to avoid mistakes and complications in the account setup. Once registered, a taxable individual is to file returns and make VAT payments at the end of the 28day tax period monthly.
Providing all required information about the business to FTA
After creating an account, the FTA will require you to provide every detail pertaining to your business such as the name, tax registration number and so on. This step too can be carried out by a tax professional who created an account with the FTA. During this step, it is also important to submit information regarding the tax period for the return filing as this would help recover the expenses associated with VAT during this period.
Submitting all VAT inputs
It is mandatory to provide the FTA with obligatory information like the VAT charged on your goods and services, as well as the VAT incurred for consuming other goods and services for your operations. Even if the items are VAT exempt or zero, this information is to be indicated.
Calculating net VAT due
After providing all required VAT outputs and input information, the net VAT amount is to be paid .Net VAT is calculated through the difference in output VAT and input VAT.
For example, if the output VAT (which is the VAT charged by a company from consumers during the sales of their goods or services) is AED 500,000 and the input VAT (VAT paid by the company to other producers of goods and services that they consume for the company’s own production) is 300,000; then in this case net VAT to be paid to FTA would be AED 500,000- AED 300,000 = AED 200,000.
If on the other hand, the input VAT incurred exceeds the output VAT collected, the FTA owes the company the difference and hence the company is eligible for a VAT refund or reclaim.
Submitting a declaration
Once all information has been submitted to the FTA, as a final step you have to provide a declaration that states that all the information provided is accurate.
From the above steps, it is evident that filing VAT returns is not an easy task and inaccurate information provided would result in heft fines and penalties. Thus, extreme caution and meticulousness must be maintained. When running a business and taking care of its various aspect, the entire VAT process might be an added burden.
Thus, getting help from tax professionals can help ensure that the registration and return filing are done as per timelines and error-free, thus avoiding heavy penalties.