Businesses bearing a Tax Registration Number (TRN) are required to submit periodic VAT returns, regardless of whether taxable supplies were made during the tax period. This includes businesses registered under both mandatory and voluntary schemes, even if they do not meet the mandatory threshold of AED 375,000 in annual turnover.
VAT returns must be filed, and any payable VAT settled, within 28 days from the end of each tax period. Failure to comply may result in penalties, making timely and accurate filing essential.
How to File VAT Return in the UAE: Step-by-Step Guide & Key Procedure
The key procedure and step-by-step guide for VAT return filing in UAE include:
1. Maintain Accurate Records
Businesses are required to ensure that all the purchases, sales, expenses, and adjustments are well recorded with good tax invoices, receipts, credit notes, import/export papers, and other similar documents. Inadequate record-keeping can lead to inaccurate VAT returns, increasing the risk of errors, penalties, and audits. Proper records enable accurate calculation of recoverable input VAT payable and output VAT.
2. Access the FTA’s EmaraTax Portal
UAE VAT returns are submitted online through the FTA’s EmaraTax portal. Businesses have to first log into their EmaraTax account using the registered credentials. If verified, the business dashboard will then be displaying VAT liabilities, such as overdue VAT returns to be filed. Businesses need to select the correct period for VAT and proceed to VAT return form.
3. Complete the VAT Return Form
The VAT return form is used to capture different kinds of supplies, output VAT, input VAT, and adjustments. Filling this form accurately is important. The sections in the form are typically as follows:
- Sales and Other Outputs: Companies are expected to account all taxable supplies within the UAE, i.e., standard-rated supplies, zero-rated supplies, and exempt supplies. Supplies are to be distinguished between those manufactured within a Designated Zone and manufactured elsewhere.
- Imports: This is an account which is to cover imports of goods and services through reverse charge mechanism. Companies are expected to account imports cleared through UAE customs and other imported services.
- Input VAT and Recoverable VAT: Businesses are required to account for recoverable input VAT on expenses and purchases in the tax period.
- Adjustments: Adjustments of bad debts, credit notes, and corrections of prior periods must be accounted for here.
- Net VAT Due: Automatically, the system would determine the net VAT payable or refundable on inputs and outputs declared.
4. Verify your Information
Before posting the VAT return, businesses are required to verify all the information entered. Verification of income tax should include:
- Verify sales values with accounting records.
- Verify input VAT claims with supplier invoices.
- Verify correct treatment of zero-rated supplies and exempt supplies.
- Check reverse charge transactions to ensure compliance.
Confirmation of the details ensures that the return is correct, complete, and in accordance with UAE VAT law. Businesses are highly recommended to have a third party check the VAT return prior to submission, especially if the company has high volumes of transactions.
5. File the VAT Return
When all the data is validated, businesses may proceed to submit the VAT return through electronic means via the EmaraTax portal. When submitted, the system will provide a VAT Return Receipt and this has to be saved and kept for the record of compliance for the business.
The submission process is done, and VAT return for the period is filed. Notification of successful submission should be ensured to prevent communication or technical issues that can result in late filing penalties.
6. Pay VAT
If the VAT return is payable, the company must pay the VAT due on the same date of submission. Payment can be done through various channels provided by the FTA, such as:
- E-dirham,
- Credit card,
- Bank transfer through GIBAN (Generated IBAN for FTA payment).
It should be noted that as long as a company owes no VAT, they have to report VAT due by making a return stating “zero VAT payable” if the above situation holds true.
7. Be Record Keeping and Audit Ready
After payment and filing, companies must retain all the records of VAT for at least five years. They consist of:
- Returns of VAT,
- Tax invoices received and issued,
- Debit and credit notes,
- Records of accounts,
- Documents of import and export.
Firms may be requested by the FTA to audit at any time to ensure VAT compliance. Recording in the correct sequence, therefore, is important not only for internal control but also for evidence of compliance when called by FTA.
Also Read: How to Verify a Tax Registration Number (TRN) in UAE
Common Errors to Avoid When Filing VAT
When studying how to file VAT return in UAE, firms must also study common errors that will lead to penalty or audit risk, including:
- Late filing of VAT returns,
- Mistakes in classification of supplies (standard-rated, zero-rated, exempt),
- Over-claiming or under-claiming recoverable input VAT,
- Inadequate reporting of reverse charge transactions,
- Inadequate maintaining supporting records for filed returns.
Avoidance and learning from such mistakes are imperative to maintaining a clean tax history and the company in good standing with the FTA.
Also Read: Zero Rated VAT and Exempt VAT in UAE
Best Practices to Guarantee VAT Filing Success
Businesses can improve VAT compliance and mitigate risks by embracing best practices, including:
- Implementing automated reminders on VAT due dates,
- Using accounting packages that assist in VAT compliance,
- Recurring training of accounting personnel in VAT legislative updates,
- Consulting VAT specialists prior to filing complex returns,
- Internal checks before filing each VAT return,
- Maintaining backup copies in soft copy and hard copy.
Ensure Accurate VAT Filing in the UAE with Leading VAT Consultants
VAT return filing in the UAE is an essential requirement for businesses which requires accuracy, proper documentation, and ensuring compliance with relevant deadlines. To effectively ensure compliance with VAT regulations in UAE and avoid incurring penalties resulting from delayed or incorrect submissions, it is advisable for businesses to seek the expert services of premier VAT Consultants in UAE. Contact us today and we shall be glad to assist you.
Frequently Asked Questions About Filing VAT Returns in the UAE
Q1. Who is required to submit VAT returns in the UAE?
All UAE businesses that are registered in VAT scope and bear a Tax Registration Number (TRN) are obliged to submit VAT returns irrespective of whether they had no tax-triggered transactions during the period of taxation or not.
Q2. When is UAE filing of VAT returns due?
VAT returns shall be filed within 28 days from the end of the tax period (monthly or quarterly) along with payment of any VAT due to the Federal Tax Authority (FTA).
Q3. Can VAT return be filed manually in the UAE?
No, VAT return shall be filed electronically through the FTA’s EmaraTax portal. Paper or manual filing is not permitted.
Q4. What are the penalties when a business submits its VAT return late in the UAE?
Late filing of VAT returns may incur monetary charges, including a one-time charge for missing the deadline and further daily charges for late payment of VAT due.
Q5. What are the documents to be kept by businesses after lodging VAT returns in the UAE?
Companies need to keep all VAT documents such as invoices, receipts, VAT returns, and tax calculation for five years in order to comply with FTA audits.
