VAT Return Filing UAE

VAT Returns Filing in Dubai, UAE

Value Added Tax (VAT) has been a key component of the United Arab Emirates’ tax system since its introduction on January 1, 2018.

VAT Returns Filing in Dubai, UAE

Value Added Tax, or VAT, has been an integral part of the tax structure since its inception in the United Arab Emirates on January 1, 2018. Being a business owner in Dubai requires complete knowledge of the VAT returns filing UAE process, ensuring one complies with it and doesn’t face any penalty for non-compliance. The following guide will outline the main components of VAT returns filing Dubai.

Understanding VAT in the UAE

VAT is a consumption tax levied at every step of the supply chain. The standard rate of VAT in the UAE is 5%, and it applies to most goods and services. Businesses are intermediaries, collecting VAT from customers and remitting it to the Federal Tax Authority (FTA).

Who Must File VAT Returns?

All businesses registered in Dubai for VAT are obligated to file a return, irrespective of whether taxable supplies were made within the tax period. The following businesses must compulsorily be registered, in case their annual taxable supplies are more than AED 375,000: smaller businesses having taxable supplies within the limits of AED 187,500 and AED 375,000 have a choice of making voluntary registration.

Filing Period

The period for VAT filing is dependent upon the size and nature of business:

Quarterly Filing: Most businesses file returns quarterly.

Monthly Filing: Businesses whose annual turnover is more than AED 150 million are mandatorily filing on a monthly basis.

Components of VAT Return

A VAT return contains several critical parts:

Output Tax: This is the VAT collected from customers on sales made during the reporting period.

Input Tax: This is the VAT paid on purchases and expenses incurred during the same period.

Net VAT Payable/Refundable: This is calculated by subtracting input tax from output tax. If output tax exceeds input tax, the business must pay the difference to the FTA. If input tax exceeds output tax, businesses can claim a refund.

Filing Process

Steps to File VAT Returns

Access the FTA Portal: Log into the Federal Tax Authority (FTA) online portal using your registered credentials.

Choose the Tax Period: Select the tax period applicable to the return you are submitting.

Fill up the Return: Fill in all the necessary columns with the appropriate information on output tax, input tax, and other relevant information.

Review and Submit: Go through all entries for accuracy and then submit the return. Figures should be accurate so that penalties do not have to be faced.

Due Date for Submission

VAT returns must be filed within 28 days after the end of the tax period. For instance, if the tax period falls on March 31, the return should be filed on April 28. Filing on time will avoid late penalties.

Record Keeping

Proper records are important in ensuring the VAT return process is smooth. The business should have all the documents for at least 5 years from the filing date. The important records are; these include, therefore;

Invoices issued and received.

Financial statements and bank records.

Contracts and agreements related to any business transactions.

Penalties for Non-Compliance

Non-compliance with VAT rules leads to big penalties:

Late Filing: AED 1,000 for the first late return and AED 2,000 for subsequent late filings within the same 12-month period.

Incorrect Returns: Submission of wrong VAT returns will incur fines of up to AED 50,000.

Failure to Register: Businesses that fail to register for VAT will face fines ranging from AED 20,000 to AED 50,000.

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