Filing of tax returns by a tax payer is an important compliance under the law. This is a crucial step for any tax payer as any future litigation may emerge from the data reported in the tax returns. A VAT return summarises the value of the supplies and purchases a taxable person has made during the tax period, and shows the taxable person’s VAT liability.
VAT returns can be filed either on monthly or quarterly basis. In UAE, VAT return shall be filed on quarterly basis for businesses with an annual turnover below AED150 million and monthly for businesses with an annual turnover of AED150 million or more. In Saudi Arabia, if the total annual sales is below 40 million SAR, the tax payer must file the return every quarter whereas if the total annual sales is more than 40 million SAR, the tax payer is required to file return every month.
In Bahrain, if the tax payer’s annual supplies exceed BHD 3 million, monthly VAT returns will be applicable. Otherwise, such tax payer will have to file the quarterly returns. Taxable businesses must file VAT returns with FTA on a regular basis and usually within 28 days of the end of the ‘tax period’ as defined for each type of business. A ‘tax period’ is a specific period of time for which the payable tax shall be calculated and paid.
Tax return shall be filed electronically through the Government portal. Before filing the VAT return form on the portal, it shall be ensured that all the conditions for filing the VAT returns are fulfilled. The VAT return format is designed to include the following details which registered businesses are required to declare:
Taxpayer’s Details: This contains details such as Tax Identification Number (TIN), VAT account number and address. These details will be auto-populated.
Standard Rated Sales: You need to capture the value of supplies (sales) and output VAT collected during the return period. Also, any VAT liability arising out of reverse charge, need to be captured here.
Zero-Rated Domestic Sales: Notified goods like qualifying medicines and medical equipment are zero-rated even if supplied within the kingdom. Such supplies need to be captured here.
Exports: Supplies outside the country are zero-rated and only the value of such supplies needs to be reported here.
Exempt Sales: Notified supplies like qualifying financial services and residential real estate are exempted from the VAT and such supplies needs to be captured here.
Standard Rated Domestic Purchases: You need to declare the value of purchases incurred on which you are eligible to recover Input Tax and the amount of Recoverable Input Tax in the VAT return period. Please note, the value of input tax credit which is restricted or which you are not eligible to claim should be reduced from the total and only the net value needs to be mentioned.
Imports Subject to VAT Paid at Customs: Imports on which VAT is paid at the time of customs clearance needs to be captured.
Imports Subject to VAT Accounted for through the Reverse Charge Mechanism: Other than imports on which VAT is paid at the customs, all other imports need to be captured here. This includes import of services and import of goods declared in customs but VAT payment need to be made while filing returns.
Zero-Rated Purchases: Zero-rated purchases need to be captured like the purchase of qualifying medicines and medical equipment’s etc.
Exempt Purchases: Purchase of goods or services which are exempted from VAT need to be reported.
MIA provides end to end solutions in tax filings. Please feel free to contact us should you have any queries