If you run a business in Dubai that is registered for VAT, it’s very important to follow the rules set by the Federal Tax Authority (FTA). This article provides a full VAT Preparation and Return Filing Checklist that will help you make your VAT compliance process easier and avoid fines. Following a structured pre-filing routine and accurately submitting the return on the EmaraTax portal will make the VAT filing process go smoothly, no matter how big or small your business is.
Before you start filling out your VAT return, you need to collect and organise all the necessary documents. Check off everything on the list below to make sure you don’t forget anything:
Sales invoices are all the tax invoices sent out for goods sold during the tax period.
Purchase invoices are real invoices from suppliers for goods or services that were bought, showing that VAT was paid.
Debit and credit notes are used to make changes for returns, discounts, or mistakes.
Import/export paperwork is needed for goods and services that are brought into or out of a country. This includes customs declarations, bills of lading (BOL), airway bills (AWB), and shipping documents.
Customs declarations and export documents are very important for zero-rated supplies to help with VAT treatment.
Accounting ledgers or general ledgers with entries that have VAT codes.
Bank statements—every business account statement to check cash flows.
Profit and loss reports for the right time period to check that income and expenses match up.
Trial balance: to make sure that debits and credits add up before VAT reconciliation.
VAT classification of purchases and supplies—correctly classify them as standard-rated (5%), zero-rated, or exempt.
Reverse Charge Mechanism (RCM): Find any imports or services that need reverse charge and make sure that both output and input VAT are recorded if they apply.
Check for input VAT eligibility: make sure that the goods or services you bought are eligible for input VAT recovery (i.e., they are for business use, not personal use, and you have valid invoices).
Blocked or non-deductible expenses: Find expenses that you can’t get back VAT on.
Proof of export, shipping documents, or a reason for the exemption are examples of supporting documents for supplies that are zero-rated or exempt.
VAT reconciliation means checking that the total output VAT (on sales) and total input VAT (on purchases) for the period are the same. You should look into and fix any mistakes.
Internal VAT reports or mock audits: do an internal review (or mock audit) of all documents before sending them in to make sure they are ready for any future audit by the FTA.
Before you send in your paperwork, make sure that all of your invoices, notes, and bank statements are there, that there are no missing transactions, and that the VAT is classified correctly.
Make the FTA Audit File (FAF). If you use accounting software or manual ledgers, export or summarise VAT data for each transaction. After that, we can go for the audit.
This detailed pre-filing checklist decreases the chances of mistakes. Similarly, this checking allows you to follow the FTA record-keeping and audit requirements.
After the recording and pre-filing checklist is done, the business can send in the VAT return with the use of official process.
Always be sure that your business is registered for VAT with FTA and has a Tax Registration Number (TRN). Both should be valid during the time of VAT filing. Now you can log into the Emara TAX official website and start the process. Businesses need to have their personal login details for it.
First of all, choose the right tax period on EmaraTax. It could be monthly or quarterly. You can check the exact timing with FTA. You will need to fill in the required details like sales, purchases, output, and input VAT, along with net VAT due.
Lastly, include all the information about input and output VAT. The changes, like debit notes, credit notes, reverse charge entries, and supplies with exempt or zero rate, should also be checked.
Businesses need to provide their VAT 201 return 28 days before the end of the tax period. It can be sent through the Emaratax portal. With the use of the portal, it is easy, quick, and you can save a fine for paying late. After you apply, keep the confirmation receipt, the filled-out VAT 201 form, the payment receipt, and any email acknowledgement.
Try and keep these documents separately as they could be required for you in the future.
There are various VAT records like invoices, ledgers, bank statements, export and import documents, etc. Businesses should keep all of these records for at least 5 years after the end of the tax period. Also, make sure that the records are easy to read and stored safely.
Not only this, but you should also get your FAF, reconciliations, and supporting documents if your company has to go through an audit.
Keep all of your VAT records (invoices, ledgers, bank statements, export/import documents) for at least five years after the end of the tax period.
If the taxable supplies and imports of the company are more than AED 375000 in the last 12 months or expected to be more than that in the next 30 days, you should register for VAT. Businesses can also register voluntarily if they want to get back input VAT.
You should keep all the VAT-related transactions, such as invoices, receipts, credit and debit notes, import and export paperwork, and accounting records safely. The records should be kept safely for at least 5 years. Furthermore, all of these invoices must meet the FTA invoice standards.
This includes the supplier and customer TRN, invoice number, date, description, VAT amount and more.
Businesses should also label their purchase and supplies correctly with standard rates, zero rate, or exempt. There are different rules for different types of compliance, documentation, and VAT recovery.
Make sure of both output and input VAT if you are using the Reverse Charge Mechanism for the goods and services you bring into the country.
You can only claim input VAT if all of the following are true: the invoice is valid, the expense is for business, and it is not blocked or a personal expense
Any business that is registered for VAT can be audited by the FTA, so it’s important to always be ready for an audit. The rules like sending invoices, keeping good records and classifying the right things, and paying timely must be followed. If you are unable to do so, the business must pay the fines.
A nil return will also be required even if there is no business activity during a certain time. The guidelines by FTA must be followed for this.
Proper payment of VAT in Dubai is a systematic task. From keeping accurate records to planning and filing on time, everything needs to be perfect. The timely VAT payment helps you to lower the risk and avoid fines.
You should also have a structured VAT preparation and pre-filing checklist before going for an audit. It is compulsory for every business operating in the UAE. Every firm must follow the rules of good tax governance if it wants to operate in the UAE.