Are you a business investor or do any kind of business in the UAE? Concerned about VAT (Value-Added-Tax)?
VAT was recently adopted in the United Arab Emirates and is now mandatory for businesses with an annual turnover of Dh375, 000 or more. Therefore, it is critical for company owners and investors to understand the VAT registration process and the VAT filing method in the UAE, which will be discussed in this blog.
What is VAT Filing?
The filing of a VAT return refers to submitting a form providing information on VAT-related sales and costs that occurred within a given tax period. The filing of VAT returns in the UAE assists businesses in determining the amount of VAT that must be paid and initiating VAT reclaim or refund procedures.
Businesses must file their VAT returns through the Federal Tax Authority (FTA) site. Because offline methods to file VAT returns using XML, EXCEL, or any other software are currently unavailable, the FTA site is designed to accept returns solely through online mode.
This means the taxpayer must manually enter the figures for Sales, Purchases, Output VAT, Input and Input VAT, and other items in the appropriate fields of the VAT return form available on the FTA site.
Which Businesses Should be VAT Registered?
VAT registration is required for enterprises with taxable products and supplies worth more than AED 375,000. It is optional for enterprises with taxable goods and supplies worth less than this amount but more than 187,500 to register for VAT.
When Must Registered Businesses file VAT returns?
According to their VAT registration certificate or the official tax website dashboard, registered firms must file VAT returns with the FTA regularly within 28 days after the end of the tax month.
Online options are available for filing VAT returns.
Learn more about VAT registration in UAE.
Important Dates for VAT Filing in UAE
The 28th day of the month after the end of the VAT return period is the deadline for filing any VAT return, whether monthly or quarterly. So, for example, if you're completing a quarterly VAT return for the quarter from February to April, the deadline is May 28th.
How is VAT Collected?
Businesses that register must:
- Companies must keep track of their VAT-related earnings and expenses.
- Customers are subject to a 5% VAT charge.
- Charge VAT on the goods and services they get from their vendors. Depending on the situation, the difference between these two figures must be paid to or reclaimed from the government.
Steps of VAT Filling in UAE?
If you are interested in knowing more about VAT, read on 8 interesting facts about VAT UAE and the steps are mentioned below for the VAT filing in the UAE:
1. Register with the Internal Revenue Service
A VAT-registered business entity in the UAE should have an account with the Federal Tax Authority (FTA). The account is necessary to begin the filing procedure. To guarantee that all information submitted to the tax office is valid, it is essential to employ a registered tax agent in the UAE to create an FTA account.
2. Give the FTA Information to the Taxable Person
A VAT-registered business entity is referred to as a taxable person. After starting the VAT return filing procedure by creating an FTA account, the following step is to provide the regulatory body with information about the firm's name, address, and tax registration number or TRN. If a licensed tax consultant in the UAE is recruited to assist with the procedure, the expert may fill in the necessary data on the company's behalf.
3. Provide a Detailed Accounting of all VAT Sales, Expenses, and other Inputs
The FTA must receive all relevant information on a business's VAT sales and costs for a single financial year. In addition, details on expenses incurred at a rate of 5%, which is the current VAT rate, must also be given.
4. Provide net VAT Calculations as a Result of the FTA.
As soon as the facts on VAT sales, costs, and associated inputs have been received, the firm must also give estimations of net VAT owed. The tax authorities must be paid the VAT due amount that is higher than the recoverable. If the recoverable amount exceeds the FTA, the difference can be reimbursed through the VAT reclaim or refund process. The estimate submitted to the FTA represents the business's tax liability for each tax period.
5. Make a Formal Declaration
Finally, a declaration verifying the correctness of all information supplied to the FTA must be filed.
For submitting VAT returns to the UAE's Federal Tax Authority, a corporate entity must be cautious. Providing false information can result in tens of thousands of dirham in penalties. Hiring a VAT professional or certified tax agent in the UAE is one way to avoid accumulating hefty fines and penalties.
Types of VAT in the UAE
The UAE now has the following five types of taxes in place:
- Foreign banks are subject to a 20% corporate income tax.
- In addition, 5% of the rental value is subject to a local municipality property tax.
- Hotel services are subject to a 10% local hotel tax.
- In addition, a 5% general tax, a 50% alcohol tax, and a 100% tobacco tax were all collected locally.
- Finally, fees for specific government services are collected (applied by the federal and Dubai governments).
A professional can ensure that the firm has supplied verifiable information, ensuring that it is not punished. The specialist can also assist you in carrying out the procedure with little or no involvement from you. Furthermore, a tax controlled agent in Dubai is knowledgeable about VAT legislation and the implementation of processes that the UAE's tax authority may seek.
Don't hesitate to call Business Setup Worldwide if you want to file VAT returns as quickly and soon as feasible. Our experts can provide you with the required services.
Contact us anytime, we’d be glad to help you.
1. Which are the contents included in the VAT return section?
Additional reporting section
2. What is the VAT return period?
Months or quarters.
3. How do I correct any VAT errors?
Submit the Voluntary Disclosure to the Federal Authority if the value is more than AED 10000
4. What is the penalty amount if I don’t return the VAT?
The penalty percentage depends on the delay period.
5. What kind of issues does one have to face during the VAT filing?