VAT Return filing

VAT Return Filing in Dubai, UAE

Value Added Tax (VAT) is charged on the consumption of goods and services. Be it a new business or an established business, filing for VAT return acts as a savior and also holds a good image in the eyes of the government. Today almost more than 180 countries have accepted the procedure and this got spread worldwide at a faster pace. The Middle East countries, especially the United Arab Emirates, which has been tirelessly working on setting itself as a business hub, has understood the importance of VAT filing. Realizing this, the GCC countries have formulated the VAT law and agreed at a VAT rate of 5%. If you are building your business plan for UAE, you should be aware of the VAT return filing and VAT related processes existing there.

In simple terms, VAT return filing states how much VAT is to be paid or reimbursed by the tax authorities. A VAT return is done quarterly and it helps the business to track the business VAT path.

VAT is also charged for business entities involved in business activities with other countries. While carrying out these activities it’s better to be VAT compliant to avoid any kind of penalty that becomes a hindrance in the way.

The taxpayer is responsible for calculating the VAT return during the filing process. It is calculated considering the following factors:

      • The total sales and purchases of your business in the relevant return period
      • The amount of VAT you owe for sales
      • The amount of VAT you can claim for the purchases made

In the end, if you owe more VAT than you are able to claim, then you need to pay the difference. If the situation goes vice-versa, you can either ask for the refund of excess VAT or can carry forward the excess to the next return period.

All registrants are required to file VAT returns, irrespective to the type of VAT registration or sales, purchases, output tax, input tax, etc.

Businesses can file their VAT return online using the Federal Tax Authority (FTA) portal, where one would find the VAT 201 form. To access this form, the taxpayer must log in to the FTA e-Services portal, and select VAT-> VAT 201- VAT Return on the navigation menu. Here, one is required to fill in information regarding the following:

      • Details of the taxable person
      • VAT return period
      • VAT on sales and all other outputs
      • VAT on expenses and all other inputs
      • Net VAT due
      • Any other reporting requirements
      • Declaration and authorized signatory

Once the form is duly filled and submitted, the taxpayer would receive an e-mail from the FTA confirming the submission of VAT return form. After submitting the return, the taxpayer has to pay the due tax, if any, through one of the various payment channels like E-dirham, exchange houses, online bank transfer, over-the-counter bank payment, etc.

VAT 201 is a declaration that needs to be made by the end of every tax period. It reflects the VAT that the vendor charges on supplies or details for which he is liable to declare output and input tax.

Sections under Form VAT 201 1. Taxable Person’s Details

Initial details like Tax Registration Number (TRN) are required to be mentioned. In case if a tax agent is submitting the documents on behalf of the taxpayer, then Tax Agent Approval Number (TAAN) is required along with the tax agency name.

2. VAT Return Period

The VAT Return period is important for any business as it sets a deadline for filing a return and also helps the entity to keep a track on their filings.

3. VAT on Sales and All Other Outputs-

The details regarding standard tax supplies need to be furnished according to the Emirates level.

4. VAT on Expense and All Other Inputs-

Here the details regarding the purchases made needs to be furnished along with 5% tax.

5. Net VAT Due

This section includes two parts: the VAT payable and VAT recoverable.

The VAT payable section mentions the tax that is due to the tax authority during the tax period whereas the VAT recoverable section states the total value of input tax that is recoverable for the tax period. The deduction between these two sections would ultimately result in a sum that is net VAT payable or recoverable.

6.  Additional Reporting Requirements

This section is important for businesses who have applied for Profit Margin Scheme during the VAT period. It doesn’t have any financial impact.

7.  Declaration and Authorized Signatory

The authorized signatures need to be linked on the documents before submitting them for VAT filing. The tax-payer should cross-check the documents properly before submission. The option of saving the details under draft and submitting it later is available.

      • VAT compliance brings along with it a certain business goodwill. In fact, many large firms are often reluctant to conduct business with companies that aren’t VAT-registered
      • The business image gets highlighted once registered under VAT law
      • VAT is easier to manage as compared to any other indirect tax

Thus, you can see how important it has become for business entities to implement VAT filing process and also to become VAT compliant while carrying out multi-national businesses. VAT filing not only protects your business but gives a legal assurance and proof of your business existence and it holds an upper hand in the arena of tax payments and avoids a financial loss. Are you trying to figure out how to initiate the process? Well, we have a solution for you.

Some of the common errors businesses made while VAT Return Filing.

It is very crucial for a business to understand the layout and reasoning for each column in a VAT return. Only by a proper understanding of the law, one can understand the intended use of a particular column in a tax return.

Some of the most common errors we noted are:

  1. Failure to issue a valid tax invoice as per provisions of law
  2. Non-maintenance of proper records
  3. Wrong emirate-wise reporting
  4. Improper adjustment of Bad debts
  5. Wrong usage of ‘Adjustment’ column in case of imports
  6. Wrong classification between Exports and Out of Scope supplies
  7. Incorrect input claims including personal expenses and entertainment expenses.
  8. Improper adjustment of Input taxes in wrong tax periods
  9. The wrong usage of Refund and VDF Forms
  10. Non-disclosure of Import of service

The above-mentioned VAT Return Filing errors are only the tip of an iceberg and can result in huge errors in the tax return. A business needs to be extremely careful in assessing its capability to address these issues as it may lead to non-compliance.

GSPU has been working as a business consultant and has been continuously dealing with businesses helping them setting their accounts, taxation and finance domain. The firm has been delivering outstanding services that resulted in retaining satisfied clients at a global level.

Some of our services include:
      • VAT registration
      • Filing VAT returns
      • Payment of return submission
      • VAT recovery
      • VAT compliance process
      • Dealing with tax inspection

Dealing with VAT is a tedious process. Our business experts would start from the very scratch and make it much easier to deal with. GSPU strives to give you the transparency, control and a better understanding of your business dealings, which would maximize your profit and lowers your expenses to a great extent.

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