VAT return in UAE

VAT return is a periodic statement submitted by VAT-registered businesses to the UAE authority. It can be filed through the Federal Tax Authority (FTA) online portal. Avoiding the VAT return filings can lead to penalties and legal issues. The UAE VAT regulations designate the data and details that must be submitted in the VAT return. It should be prepared in accordance with the VAT return form issued by the UAE authority. This article helps you to learn about all the aspects of VAT return in UAE.

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What is VAT return in UAE?

A VAT return, formally known as VAT Form 201, is a document mandated by the Federal Tax Authority (FTA) for all VAT-registered businesses in the UAE. It acts as a summary of a business's Value Added Tax (VAT) activity for a specific tax period. This period can be monthly or quarterly, depending on the FTA's designation on your VAT registration certificate.

The VAT return captures details of:

• Sales and All Other Outputs: This section reflects the total value of taxable supplies and any exempt supplies made by the business during the tax period. It also details the VAT collected on these supplies.
• Expenses and All Other Inputs: This section captures the total value of all purchases and expenses incurred by the business during the tax period. It also highlights the recoverable VAT amount, the portion of VAT paid on these purchases that the business can claim back from the government.

Importance of VAT return filing in UAE

Filing VAT returns accurately and on time is necessary for VAT-registered businesses in the UAE. Here are the reasons,

• Compliance with UAE VAT Law: Failure to file VAT returns or filing them incorrectly can lead to penalties and legal complications as per the UAE VAT Law.
• Calculating VAT Liability: The VAT return helps determine a business's VAT liability for the tax period. This liability is the difference between the VAT collected on sales (output tax) and the VAT paid on purchases (input tax).
• Claiming Input Tax Refunds: Businesses can claim refunds for the VAT they paid on purchases through the VAT return. Timely filing ensures these refunds are received promptly.
• Maintaining Compliance with the FTA: Consistent and accurate VAT return filing demonstrates a business's commitment to tax compliance, fostering a positive relationship with the FTA.

Who needs to file VAT returns in UAE?

Any business registered for VAT in the UAE must file VAT returns, regardless of size, industry, or profitability. Larger taxpayers are generally said to submit their VAT returns monthly, while small and medium taxpayers must file quarterly. But it is better to check with the FTA. If no business transactions occur in the tax period, you are required to submit a "nil" return by the given due date.

How to File VAT Returns in the UAE?

The Federal Tax Authority (FTA) mandates electronic filing of VAT returns through its official online portal. Here's a simplified breakdown of the process:

1. Gather Necessary Documents: Prepare all relevant documents for the tax period, including sales and purchase invoices, debit and credit notes, and any other documents supporting your VAT calculations.
2. Access the FTA Portal: Register on the FTA's e-Services portal using your Tax Registration Number (TRN) and secure credentials.
3. Navigate to VAT Return Section: Locate the VAT Return section within the portal and select the appropriate tax period for filing.
4. Input VAT Return Data: In the designated sections of the VAT return form, enter the required details, including sales and purchase values, VAT collected/paid, and any adjustments.
5. Review and Submit: Carefully review all entered information for accuracy before submitting the VAT return electronically.

VAT return form in UAE

The VAT return form (VAT Form 201) consists of various sections capturing specific VAT-related information for the tax period. Here's a breakdown of some key elements:

• Tax Period: This section identifies the specific month or quarter for which the VAT return is filed.
• Taxpayer Information: This section captures details of the VAT-registered business, including its TRN and trade name.
• VAT on Sales and All Other Outputs: This section details the total value of taxable supplies, exempt supplies made (if any), and the VAT collected on these supplies.
• VAT on Expenses and All Other Inputs: This section captures the total value of all purchases and expenses incurred, the recoverable VAT amount (input tax), and any adjustments made to previously claimed input tax.
• Net VAT Due or Refund: This section calculates the final VAT liability for the tax period. It reflects either the amount of VAT payable to the FTA (output tax exceeding input tax) or the amount of VAT refundable by the FTA (input tax exceeding output tax).

Deadlines and Penalties for Late VAT return Filing

The FTA mandates strict deadlines for filing VAT returns. Businesses must submit their VAT returns electronically within 28 days of the tax period's end. Failing to comply with these deadlines can result in penalties:

• Late Filing Penalty: A penalty of AED 1000 will be charged on the first occurrence of the delay. And, it will be increased to AED 2000 unless the filing is done within 24 months. 
• Additional Penalties: In deliberate or repeated non-compliance cases, the FTA may impose further penalties, including potential business license suspension.

Learn more: VAT Penalties and Fines in UAE

Maintaining Accurate Records for VAT Returns in UAE

Accurate record-keeping is essential for filing error-free VAT returns. Businesses should maintain a system to document all transactions:

• Sales and Purchase Invoices: Retain all sales and purchase invoices, ensuring they reflect the taxable value, VAT rate, and relevant tax codes.
• Debit and Credit Notes: Keep track of all debit and credit notes issued or received, as they can impact the VAT liability.
• Expense Records: Maintain proper records of all business expenses, including receipts and other supporting documents, for claiming input tax deductions.

Conclusion

In summary, filing VAT returns in the UAE is mandatory for VAT-registered businesses. It ensures compliance with regulations, calculates VAT liability, facilitates claiming input tax refunds, and maintains a good standing with the authorities. By understanding the process, deadlines, and record-keeping requirements, businesses can navigate VAT return filing smoothly and avoid potential penalties. Filings.ae simplifies the UAE VAT return filing process with end-to-end assistance.

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