ALL ABOUT VAT RETURNS IN UAE
The VAT in the UAE was implemented on 1st January 2018 as a result of the decline in the oil prices. With an aim to broaden its revenue base, UAE levied 5% VAT on the host of goods and services but had exempted some of the key goods and services from the tax net.
Implementation of VAT in the UAE bought along with it a lot of legislation, procedures, and processes that were to be mandatorily followed by the people. One process amongst them was filing of VAT returns.
The article below gives a detailed description of the VAT return in the UAE.
LENGTH OF THE TAX PERIOD
Cabinet decision No 52 of 2017 contains some of the provisions related to the length of the tax period.
Article 62 of the decision states that the length of the tax period is 3 calendar months ending on the date determined by the Federal Tax Authority. It further deals with cases where a shorter or a longer tax period is assigned for the following purposes :
- Reduction of the risk of tax evasion
- Enabling the authorities to improve the monitoring of compliance and collection of tax revenue
- Reducing the authority’s administrative burden or the compliance burden on the person or class of person’s.
This article also gave a taxable person the liberty to request the authority to end the tax period with the month solicited for.
2. Article 63 of the decision deals with tax periods in case of loss of capacity and states that :
- The current tax period would end on the day before the person became incapacitated
- A new tax period would commence on the day the person became incapacitated person in the name of the legal representative.
DUE DATE OF FILING THE TAX RETURNS
The UAE’s Cabinet Decision states that the tax return and the payment of due tax to the Authority must be submitted not later than the 28th day after the end of the relevant tax period. Irrespective of the monthly and the quarterly tax period which is followed, a new biannual tax period will be introduced in November 2019 for some small businesses, commercial real estate owners and board members.
DATE TO FILE THE VAT RETURN HAS BEEN EXTENDED
The Federal Tax Authority had increased the due date for filing tax returns from January 31st, 2018 to February 28th, 2018 for the taxable person whose first tax period had ended on January 31st, 2018.
WHEN SHOULD THE RETURN BE FILED WHEN THE DUE DATE IS A WEEKEND OR A NATIONAL HOLIDAY?
In case of the due date of filing the return is a weekend or a national holiday, the payment is to be made on the succeeding business day.
FORM FOR VAT RETURN
Returns can be filed using form VAT 201 and Form 311 to claim input refund and the FTA has also issued a guide to filing the tax returns for the companies as well as the taxpayers. The form, however, requires the taxpayers to report the supplies to be it zero-rated, exempt supplies separately and also the standard rate supplies at 5% for each emirate.
MODE OF PAYMENT OF VAT
The Payment of VAT liability/ penalty can thus be done through an e-Dirham card or either credit cards (Visa or Mastercard). Charges for the payment via an e-Dirham card would be Dh3 per transaction while the payment via credit card would incur a charge between 2 and 3 percent of the total payment amount.
REQUIREMENTS FOR VAT RETURNS
- The Emirates are to segregate the value of supplies of the goods and services that have been made within the period subject to the standard rate of VAT.
- The supplies that have been subject to the reverse charge provision (if applicable ) other than the goods that have been imported and for which VAT has been declared.
- Zero-rated and exempt supplies
- Goods that have been imported into UAE
- Adjustments to goods that have been imported into the UAE ( if applicable )
- All the expenses that have been subject to the standard rate of VAT for which one would like to recover input tax and the tax amounts that are recoverable
- All the expenses that were subject to the reverse charge for which one would like to recover input tax and the tax amounts that are recoverable
- be filed monthly by companies with an annual turnover above Dh150 million, while businesses with revenue below that level must file quarterly
WHAT SHOULD NOT BE MENTIONED IN THE VAT RETURN?
As per the public clarification on bank interest and dividend issued by the Federal Tax Authority referred to as VATP010, Interest earned on the deposit of business income by a retail business into the bank account and dividend income earned by a shareholder holding shares in a company is outside the scope of VAT and is not to be furnished in the business’s VAT return.
STEPS TO SUBMIT A VAT RETURN?
The Federal Tax Authority has set out a four-step process which the companies need to follow in order to file their returns online.
Login to the FTA E service portal and go to the VAT tab whereby one would be able to access their VAT return. From this screen, one should click on the option to open the VAT return.
Complete the form by filling the following details :
Sales and as well as the other outputs as well as on the expenses and all the other inputs as follows :
- The net amount excluding VAT
- The VAT amount
The system would then calculate the payable tax or the repayable tax
Submit the form
Carefully review all the information that is entered on the form after completing all the mandatory fields and confirming the declaration. Once one has confirmed that all the information that has been included in the VAT return is correct, one is supposed to click on the submit button.
Settle the payable VAT ( if applicable):
One is to settle the payable VAT through my payments tab. One has to ensure that the payment deadlines are met.
The returns can, however, be filed both in English as well as Arabic.
WHAT IS THE PENALTY IN CASE OF DELAY IN VAT RETURNS?
The returns are however required to be submitted within a specified deadline otherwise a penalty of Dh 1000 would be imposed for the first time and in case of repetitive non-compliance within 24 months, the penalty would be doubled to Dh 2000 for each offense.