VAT Return Preparation Checklist in UAE

The United Arab Emirates (UAE) implemented Value Added Tax (VAT) in 2018, requiring businesses exceeding the registration threshold or voluntarily opting-in to register for VAT. VAT compliance includes filing periodic VAT returns, which can be a complex process for businesses unfamiliar with the system. This comprehensive checklist aims to guide businesses in the UAE through the VAT return preparation process, ensuring accuracy and timely submission.

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What is VAT Return in UAE?

A VAT return in UAE is a summary report filed by registered businesses detailing their sales and purchases with VAT (Value Added Tax) for a specific tax period. It shows the amount of VAT collected from customers (output tax) and the amount of VAT paid on purchases (input tax). The report determines your final VAT liability, which is either paid to the Federal Tax Authority (FTA) or claimed back if your input tax is higher. You must file the VAT return electronically through the FTA portal typically within 28 days of the tax period ending.

What are VAT Return Filing Requirements in UAE?

Before diving into the checklist, it's crucial to understand the core aspects of VAT return filing in the UAE:

• Tax Period: The Federal Tax Authority (FTA) mandates VAT return filing frequency based on a business's taxable supplies in the preceding twelve months. Businesses with taxable supplies exceeding AED 150 million in the previous year must file VAT returns monthly. Quarterly filing applies to businesses with taxable supplies between AED 37.5 million and AED 150 million, while those below AED 37.5 million can file biannually.
• Due Dates: VAT return submission deadlines fall on the 28th day of the month following the tax period. Businesses with a valid Tax Group Registration can enjoy a 15-day extension, pushing the due date to the 15th of the subsequent month.
• Filing Methods: The FTA offers two primary methods for filing VAT returns: electronically through the Authority's online portal (EmTax) or by utilizing a Tax Agent service.

Essential Documents for VAT Return Preparation

Gathering the necessary documents well in advance is critical for a smooth VAT return preparation process. Here's what you'll need:

• Tax Registration Certificate: Your Tax Registration Certificate issued by the FTA serves as a reference for your business's VAT registration details.
• Accounting Records: Maintain accurate and up-to-date accounting records for all your transactions, including sales invoices, purchase invoices, debit and credit notes, and expense receipts.
• Bank Statements: Reconcile your bank statements to ensure all transactions are reflected in your accounting books.
• Import Customs Declarations: If your business imports goods, retain copies of import customs declarations for reporting import VAT.
• Previous VAT Returns: Having copies of previously filed VAT returns facilitates comparisons and ensures consistency.

VAT Return Preparation Checklist

With a clear understanding of filing requirements and documents in hand, proceed with the following checklist to prepare your VAT return:

1. Review Tax Period and Determine Filing Frequency

Confirm the relevant tax period for which you're filing the VAT return. Refer to your taxable supplies in the preceding year to determine the applicable filing frequency (monthly, quarterly, or biannually).

2. Gather and Organize Supporting Documents

Assemble all the documents mentioned earlier, ensuring they are well-organized and readily accessible. This includes sales and purchase invoices, debit and credit notes, bank statements, customs declarations (if applicable), and prior VAT return filings.

3. Reconcile Bank Statements and Accounting Records

Reconcile your bank statements with your accounting records to identify and rectify any discrepancies. This ensures all financial transactions are accurately reflected in your books.

4. Categorize Transactions

Classify your transactions into taxable supplies, exempt supplies, reverse charges, and non-taxable supplies. Understanding the VAT treatment of each transaction is crucial for accurate reporting.

5. Calculate VAT on Taxable Supplies

Calculate the VAT amount payable on your taxable supplies at the standard VAT rate (5%) or zero-rated supplies (if applicable). Refer to your sales invoices for the total value of taxable supplies.

6. Claim Input VAT on Allowable Expenses

Review your purchase invoices and other expense receipts to identify recoverable input VAT on business-related expenses. Ensure these expenses are incurred for taxable supplies and meet the FTA's eligibility criteria.

7. Calculate Net Tax Payable (or Refundable)

Subtract the total recoverable input VAT from the total output VAT (VAT on taxable supplies) to arrive at the net VAT payable to the FTA. If the calculation results in a negative figure, you might be eligible for a VAT refund.

8. Complete the VAT Return Form (Form 201)

Access the FTA's EmTax portal and log in using your credentials. Navigate to the VAT return filing section and complete Form 201 electronically. The form comprises various sections for reporting details such as taxable supplies, exempt supplies, reverse charges, input VAT claimed, net tax payable, and any adjustments.

9. Review and Submit the VAT Return

• Ensure all information corresponds with your prepared calculations and supporting documents.
• Double-check for any typos or inconsistencies before submission.
• Once satisfied with the accuracy, submit the VAT return electronically through the EmaraTax portal.

10. Retain Copies for Recordkeeping

Maintain copies of the submitted VAT return form and all supporting documents for your business records. The FTA recommends a minimum retention period of five years for VAT-related documents.

Conclusion

In conclusion, filing VAT returns in UAE is essential for businesses registered for Value Added Tax. By following this checklist and understanding the key requirements - filing frequency, deadlines, and document gathering - businesses can ensure accurate and timely VAT return submissions, avoiding penalties and maintaining VAT compliance. Remember, you can file electronically through the FTA portal.

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