VAT RETURN FILING FOR BUSINESSES IN UAE

By VATBOX | 10 October 2022

VAT RETURN FILING FOR BUSINESSES IN UAE

The first Value Added Tax (VAT) return provided the Federal Tax Authority (FTA) with a pleasant period for filing to ease reporting and regulatory pressure on businesses. All companies must log on to the website of the FTA and verify under their profile the tax period. The first VAT return period was given to some of the companies for one month, while the first VAT return was given to most of the companies for the first month.

How to file VAT Return in UAE

VAT returns should be prepared well in advance by a taxable person as he is expected to file the VAT return online in the 'VAT 201' form on the FTA portal. There is currently no facility available on the FTA portal for offline filing of tax returns. The taxable individual must correctly fill in the VAT 201 form and provide sales, purchase, input VAT and output VAT information.There are seven sections, as mentioned below in the VAT 201 form:

  • Taxable Person details

Information as to Tax Registration Number / TRN of the taxable person and contact information. If a Tax Agent is submitting the tax return on behalf of the taxable person, then the information about Tax Agent Approval Number / TAAN) and Tax Agency Number / TAN along with the Tax Agent name and Tax Agency name gets automatically populated.

  • Value Added Tax return period

Information as to VAT Return Period, VAT Return Due Date, Tax Year-End, and VAT Return Period Reference Number.

  • VAT on sales and all other outputs

In this section of VAT Return, the taxable person has to provide information as to standard rated tax supplies in different emirates including Abu Dhabi, Dubai, Sharjah, Ajman, Umm al Quwain, Ras Al Khaimah, and Fujairah. Further, detail as to tax refunds provided to tourists under the Tax Refunds for Tourists Scheme should be provided. It is also necessary to provide information as to exempt supplies, zero-rated supplies, goods imported into the UAE, and adjustments to goods imported into the UAE.

  • VAT on expenses and all other inputs

In this section of Tax Return, you have to furnish information on standard rated expenses, and supplies subject to reverse charge provisions.

  • Net VAT due

This section requires furnishing information on the total value of due tax for the period, the total value of recoverable tax for the period, and payable tax for the period.

  • Additional reporting requirements

Additional reporting requirements are only applicable to taxable persons who have applied the provisions of the Profit Margin Scheme during the taxable period. Others may simply say tick ‘No’ and skip to the next section.

  • Declaration and authorized signatory

This section requires the taxable person to declare that information provided in the VAT return is factually correct, accurate, and complete to the best of his knowledge. Hence, utmost care should be taken while preparing the VAT filing. The taxable person has an option to save the draft tax return and submit it later.

VAT Return Fines & Penalties

  • Failure to keep the required records specified by the tax procedures law and the tax law - AED 10,000 for the first time and AED 50,000 for each repeat violation.
  • Failure to submit the required records in Arabic when requested by the Authority. - AED 20,000
  • Failure to submit a registration application within the timeframe specified by the tax law - AED 20,000
  • Failure to submit a deregistration application within the timeframe specified by the tax law - AED 10,000
  • Failure to inform the Authority of an amendment to tax records that needs to be submitted - AED 5,000 for the first time and AED 15,000 in case of repetition
  • Failure to notify the authority that a legal representative has been appointed for the business within the specified timeframe. The penalties will be charged to the legal representative. - AED 20,000
  • Failure of the legal representative to file a tax return within the specified timeframe. The penalties will be charged to the legal representative - AED 1,000 for the first time and AED2,000 in case of repetition within 24 months
  • Failure of the Registrant to submit a tax return within the time frame specified by the tax law - AED 1,000 for the first time and AED 2,000 in case of repetition within 24 months
  • Failure to pay the tax stated in the tax return/tax assessment form within the time frame specified by the tax law. The taxable person will incur a late payment penalty as follows:- 2% of the unpaid tax is due immediately, 4% is due on the seventh day following the deadline for payment and 1% daily penalty will be charged on any amount that is still unpaid one calendar month after the deadline for payment, up to a maximum of 300%.
  • Submission of incorrect tax returns.Two penalties are applied:
    •Fixed penalty of:- (AED 3,000) for the first time and (AED 5,000) in case of repetition
    • Percentage-based penalty shall be applied on the amount unpaid to the Authority due to the error as follows:- (50%) if the Registrant does not make a voluntary disclosure or he made the voluntary disclosure after being notified of the tax audit and the Authority has started the tax audit process, or after being asked for information relating to the tax audit, whichever takes place first, (30%) if the Registrant makes a voluntary disclosure after being notified of the tax audit and before the Authority starts the tax audit and (5%) if the Registrant makes a voluntary disclosure before being notified of the tax audit by the Authority.
  • Voluntary disclosure by a business of errors in a tax return, tax assessment, or refund application.Two penalties are applied:
    • Fixed penalty of:- (AED 3,000) for the first time and (AED 5,000) in case of repetition
    • Percentage-based penalty shall be applied on the amount unpaid to the Authority due to the error as follows:- (50%) if the Person/Taxpayer makes the disclosure after either of the following conditions applies: a) they have been notified of the tax audit and the Authority has started the audit process, or b) they have been asked for information relating to the tax audit.”, (30%) if the Person/Taxpayer makes a voluntary disclosure after being notified of the tax audit but before the start of the tax audit and (5%) if the Person/Taxpayer makes a voluntary disclosure before being notified of the tax audit by the Authority.
  • Failure of a business to voluntarily disclose errors in a tax return, tax assessment, or refund application before a tax audit. Two penalties are applied:
    • Fixed penalty of:- (AED 3,000) for the first time and (AED 5,000) in case of repetition
    • 50% of the amount unpaid to the Authority due to the error.
  • Failure of a person or business to facilitate the work of the tax auditor - AED 20,000
  • Failure of the Registrant to calculate tax on behalf of another person as required under the tax law. The Registrant shall incur a late payment penalty as follows:- 2% of the unpaid tax is due immediately once the payment is late, 4% of the amount of tax which is still unpaid is due on the seventh day following the deadline for payment and 1% daily penalty will be charged on any amount that is still unpaid one calendar month after the deadline for payment, up to a maximum of 300%.
  • Failure to account for tax due on import of goods as required under the tax law - 50% of unpaid or undeclared tax.

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