Are you an investor or do you conduct any type of business in the UAE? Are you concerned about Value-Added Tax (VAT)? VAT was recently implemented in the United Arab Emirates and is now required for firms having annual revenue of at least Dh375,00. Therefore, it is essential for business owners and investors to comprehend the VAT registration procedure and VAT filing technique in the UAE, which will be described in this article.
What is a VAT Return?
The filing of a VAT return refers to the submission of a form detailing VAT-related sales and expenses that happened within a specified tax period. The submission of VAT returns in the UAE supports businesses in calculating the amount of VAT that must be paid and commencing VAT reclaim or refund procedures.
Businesses must file their VAT returns on the website of the Federal Tax Administration (FTA). Because offline options for filing VAT returns using XML, EXCEL, or any other programme are unavailable at this time, the FTA website is designed to accept returns exclusively via online mode. This signifies that the taxpayer must manually input the values for Sales, Purchases, Output VAT, Input and Input VAT, and other items in the corresponding fields of the VAT return form available on the FTA website.
Which Businesses Should be VAT Registered?
Companies with taxable items and services worth more than AED 375,000 must register for VAT. VAT registration is optional for businesses with taxable products and services worth less than this amount but greater than $187,500. This signifies that the taxpayer must manually input the values for Sales, Purchases, Output VAT, Input and Input VAT, and other items in the corresponding fields of the VAT return form available on the FTA website.
Which Businesses Should Register for VAT?
Companies with taxable items and services worth more than AED 375,000 must register for VAT. VAT registration is optional for businesses with taxable products and services worth less than this amount but greater than $187,500.
When Must Registered Businesses submit VAT returns?
According to their VAT registration certificate or the dashboard on the official tax website, registered businesses must file regular VAT returns with the FTA within 28 days of the end of each tax month. There are online methods for filing VAT returns.
Learn more about VAT Registration in the UAE.
Dates Important for VAT Filing in UAE
Any VAT return, whether monthly or quarterly, must be submitted by the 28th day of the month after the end of the VAT return period. Thus, if you are filing a quarterly VAT return for the period from February to April, the due date is May 28.
How is Value-Added Tax Collected?
Companies that register must:
- Companies are required to track their VAT-related income and costs.
- Customers must pay a 5% VAT surcharge.
- Tax the products and services they get from their vendors with value-added tax. Depending on the circumstances, the difference between these two sums must either be paid to the government or recovered from it.
Steps in UAE VAT Filing?
The following are the steps for VAT filing in the UAE:
1. Become a member of the Internal Revenue Service
A VAT-registered business entity in the UAE must have a Federal Tax Authority account (FTA). The account is required to initiate the filing process. To ensure that all information given to the tax office is accurate, it is necessary to hire a licenced tax agent in the UAE in order to open an FTA account.
2. Provide the Taxpayer with the FTA Information
A taxable person is a business entity that has registered for value-added tax. After creating an FTA account to begin the VAT return filing process, the next step is to supply the regulatory body with the company’s name, address, and tax identification number or TRN. If a licenced tax consultant in the UAE is hired to assist with the procedure, the expert may submit the required information on behalf of the business.
3. Provide a comprehensive accounting of all VAT sales, expenses, and other inputs.
The FTA must obtain all pertinent data on a company’s VAT sales and expenses for a single fiscal year. In addition, data regarding costs incurred at the current VAT rate of 5% must be provided.
4. Provide net VAT calculations resulting from the FTA.
As soon as the facts on VAT sales, expenses, and associated inputs are obtained, the business must also provide estimates of net VAT due. The tax authorities must be paid the amount of VAT owing that exceeds what is recovered. If the amount retrieved exceeds the FTA, the difference can be refunded via the VAT reclaim or refund process. The estimate presented to the FTA represents the company’s annual tax liability.
5. Make a Formal Statement
Lastly, a declaration confirming the accuracy of all information provided to the FTA must be submitted. A corporation must use caution while filing VAT returns to the Federal Tax Authority of the United Arab Emirates. The fines for providing inaccurate information might amount to tens of thousands of dirhams. Employing a VAT expert or registered tax agent in the UAE is one approach to prevent amassing costly fines and penalties.
VAT types in the UAE
There are now five types of taxes in force in the UAE:
- Foreign financial institutions are subject to a 20% corporate income tax.
- Additionally, 5% of the rental value is subject to local property taxes.
- The provision of hotel services is subject to a 10% municipal hotel tax.
- In addition, municipal governments collected a 5% general tax, a 50% alcohol tax, and a 100% cigarette tax.
- Finally, fees are collected for particular government services (applied by the federal and Dubai governments).
An expert may guarantee that the company has provided verifiable information, preventing it from being penalized, and can also aid you in doing the process with minimal or no participation on your part. Moreover, a tax-regulated agent is familiar with VAT laws and the implementation of processes that the UAE’s tax authorities may need.
Call MIALLP immediately if you wish to file your VAT returns as promptly as possible. Our specialists can help you with the various VAT related services, CONTACT US at any time; we’d be happy to assist you.