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VAT Filing in the UAE : Everything You Need to Know

The Value Added Tax (VAT) is a general tax that is levied on almost all goods and services sold. It was introduced in the UAE in the year 2018. The simple idea behind VAT is that the consumers pay a tax on the goods and services bought by them and the amount that they pay is dependent upon the value of the goods and services bought. VAT is a fixed rate on the total amount for the items bought and hence the higher the price, the more the customer pays as VAT. In the UAE VAT is compulsory for a business that has a turnover of AED 375,000 or more. Therefore, business owners must have a clear understanding of how to register for VAT and how to file the VAT returns in the UAE. Therefore, in this article, we will be throwing light on how to do the VAT filing in UAE and how VAT registration UAE can help you in keeping your VAT-related works in line with the guidelines issued by the Federal Tax Authority.

What is VAT return filing in UAE?

The VAT return filing in the UAE is a very simple process that involves the submission of a form containing information regarding VAT related sales and expenses that have occurred over a specific tax period for a business or an entity. The filing of VAT returns is important for business entities as it gives the businesses a clear picture of the amount of VAT that has to be paid as well as for the initiation for VAT refund or reclaim.

Read also: Administrative penalties under VAT in UAE

Steps for VAT filing in the UAE

The procedure for VAT filing in Dubai can be explained in a step-by-step manner that is mentioned below.

Step 1:To open an account with the Federal Tax Authority

A business entity in the UAE that is registered for VAT must have an account with the FTA. This account is needed for initiating the VAT return filing process. The best way to do this is to hire a tax agent in the UAE for the creation of an FTA account to ensure that all the information submitted to the FTA is true and correct. Once a business entity has registered for VAT with the FTA in the UAE, they are required to file the VAT returns and make the VAT-related payments within 28 days from the end of the tax period.

Step 2: Sending details of the taxable person to the FTA

The taxable person in this reference is the business entity itself. Once the account has been created with the FTA for the initiation of VAT return filing, the next step involves providing the regulatory body with all the details related to the business including the name, address, and tax registration number (TRN). If the first step was done by a tax consultant, then he can do this on behalf of the business entity. Also, it is important for the business entity or the tax agent who is filing the VAT return, to furnish the details regarding the tax period for filing the VAT return. This is essential for all businesses because this allows them to recover the VAT-related expenses made for a particular tax period or year.

Step 3: VAT sales and expenses, as well as all the inputs, must be accounted for

The mandatory information on VAT sales and expenses that a business has made in a financial year needs to be submitted to the FTA. All the details such as exempt and zero-rated supplies along with other details have to be given. The details made regarding expenses made at the current VAT rate of 5% are also supposed to be mentioned.

Step 4:Furnish calculations with regards to the net VAT due to the FTA

Once the details regarding the VAT sales, expenses, as well as other related inputs have been submitted, the business must also produce the calculation of the net VAT due by the business. In case the VAT amount due by the business is higher in comparison to the recoverable amount, the difference amount needs to be paid by the tax authority. On the other hand, if the recoverable amount is higher in comparison to what is due to the FTA, then the amount can be refunded back to the business through VAT refund or VAT reclaim. The calculation that is provided to the FTA here represents the tax payable by the business for a particular tax period.

Step 5: Submitting the declaration

The last step for VAT filing in Dubai involves, submitting a declaration regarding the accuracy of all the information that has been submitted by a business to the FTA.

This is the way a business entity can file a VAT return in the UAE with the Federal Tax Authority. It is highly important that the business entities are very cautious when filing VAT returns in the UAE. incorrect information or misleading figures can lead to hefty fines and penalties.

How VAT registration UAE can help you in systematic VAT filing in the UAE?

The businesses in the UAE must comply with the VAT rules and regulations laid down by the FTA. A slight error in filing VAT returns or in furnishing the details of the number of sales and purchase of goods and services by the businesses can result in trouble for the businesses. The hefty fines imposed by the government for failing to comply with the VAT rules can make the companies bankrupt. Therefore, VAT registration in UAE can help you in avoiding such situations. We have a team of experienced tax agents who can help you out in filing your VAT returns in very convenient and hassle-free ways. They can help you in ensuring that the process is carried out in a way that eliminates the chance of penalizations. The experts help you in finishing the process without the requirement of much involvement by the business owners. Added on to this, a tax agent in the UAE is well versed with the latest tax regulations and all the latest amendments. Therefore, you can simply sit back and relax without having to worry about the VAT filing in the UAE for your business.

Read also: Compulsory and Voluntary Registration of VAT in Dubai for Businesses

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.