Requirement for VAT Return Filing in UAE

Value Added Tax is charged at every phase of product value addition across the supply chain. It is charged at every sale point, from the producer to the final customer. A VAT return shows the value of the supplies and buys a taxable person has made during the tax period and summarizes the taxable person’s VAT liability.

The COVID-19 pandemic has influenced everything. Due to this, the UAE government has taken several steps to assist enterprises onshore and offshore. The steps include lowering renewal costs and altering employment restrictions to provide firms more flexibility during the pandemic. The UAE’s federal government implemented the ‘Targeted Economic Support Scheme’ as an immediate solution. This initiative was passed on March 15, 2020, to aid private firms harmed by the epidemic.

Businesses must file VAT Returns online using the Federal Tax Authority Portal. The portal is created to accept the returns only through online mode as offline capabilities to file VAT returns through XML and EXCEL are not available. This means that the taxpayer has to manually provide the details in the boxes of the VAT return form available in the portal.

The VAT Return form is called ‘VAT 201’, which the taxpayer needs to fill and submit to complete the VAT Return filing. The Form VAT 201 is segmented into seven sections as mentioned below:

  • Details of the taxable person
  • Period of VAT Return
  • VAT on sales and other outputs
  • VAT on expenses and other inputs
  • Net VAT Outstanding
  • Additional requirements
  • Declaration and Authorized Signatory

How to file a VAT return?

You must file tax returns through the FTA portal. Before filing the VAT return, ensure you have met all tax return requirements.

When are companies required to file VAT returns?

Taxable companies must file VAT returns regularly and within 28 days of the ‘tax period’ defined for each type of business. A ‘tax period is a period for which the payable tax shall be calculated and paid. The standard tax period is as follows:

  • quarterly for companies with an annual turnover below AED150 million
  • monthly for companies with a yearly turnover of AED150 million or more.

Failure to file a VAT return will make the violator liable for fines and penalties according to the provisions of Cabinet Resolution No. 40 of 2017.

Filing of VAT Return in UAE

Filing VAT returns in the UAE entails several levels. If you want to know what each section in the form implies and how to fill it out, seek a VAT return sample. However, here is a list to give you a better picture of what the return form looks like.

Step 1: Access the Portal

You must log in to the FTA’s services portal using the username and password connected with your VAT account. After that, you’ll see a dashboard with a summary of your active tax.

Step 2: VAT option

On the top, click the VAT option. Then choose VAT 201 – VAT refund option. Then choose the ‘VAT 201 – New VAT Return’ option.

Step 3: Fill in the details.

Fill in all your information. TRN, person name, and address are examples. Details like TAAN, TAN, agent and agency name will be shown if a tax agent is paying the tax on your behalf.

Step 4: Period of VAT Return

This section’s details will be shown to you automatically. The period of VAT return, the tax year-end, the due date, and the reference number will all be displayed. VAT on sales and other outputs is the next step. Standard-rated, exempt, zero-rated, and supplies subject to the reverse charge provisions, goods imported into the UAE, and changes made on the items imported into the UAE will all be required.

Step 5: Net VAT Due

This includes the amount of owing tax, recoverable tax, and paying tax at the given time. The tax payable will be calculated using sales and other output details. The difference between output VAT and input VAT is the due tax. After submitting the form, if the output VAT exceeds the input, you can request a refund by filling out the details in the VAT Refund Form VAT 311.

Step 6: Any Other Reporting Requirements

This part is for those who have used the “Profit Margin Scheme”. If you haven’t yet implemented it, select ‘No’ and move on to the next level.

Step 7: Declaration

You can finally submit the VAT return under the ‘Declaration and Authorized Signatory’ segment. You must adequately read the declaration box before submitting your return. After submitting, the FTA will send you a confirmation email.

To understand the procedure and status of VAT return filing, keep in touch with your accounting staff. Also, watch out for any VAT adjustments made by the FTA.

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