VAT has recently been implemented in the United Arab Emirates and is compulsory for business entities with an annual turnover of Dh375,000 or more. That being said, it is essential for business owners and investors to get a clear idea about the process for VAT registration, and more importantly, VAT filing procedure in UAE which we will tackle in this article.
Being knowledgeable on these crucial processes won’t only help in filing VAT returns, but also provide a holistic view as to every point of operational activity of the business as well as how it’s calculated. Are you running a business in Dubai or anywhere in the UAE? If so, you need to know about the VAT filing requirements are and another crucial process of VAT return filing in the country.
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What is VAT return filing?
The VAT return filing refers to the submission of a form containing information regarding sales and expenses related to VAT and have been made during a specific tax period. The filing of VAT returns in UAE helps business entities in understanding the amount of VAT that has to be pair as well as for the initiation of VAT reclaim or refund.
Steps for VAT Return Filing in UAE
In order to process the filing of VAT returns, here are the steps that have to be followed:
1. Have an Account with the Federal Tax Authority.
A business entity in the UAE that is VAT-registered should have an account with the Federal Tax Authority (FTA). The account is required in initiating the filing process. It is best to hire a regulated tax agent in the UAE for the creation of an FTA account to ensure that all information provided to the tax authority are correct.
2. Provide the FTA with Details Regarding the Taxable Person.
The taxable person in this context refers to a VAT-registered business entity. As soon as the VAT return filing process has been initiated through the creation of an FTA account, the next step is providing the regulatory body with details regarding the business including its name, address, and tax registration number or TRN. If a regulated tax consultant in Dubai was hired in order to assist with the processing, the expert can fill the essential details on behalf of the business.
Also, it is important to provide details regarding the tax period for the filing of VAT returns. It’s essential for all businesses as it allows them to recover the VAT related expenses made on a particular tax year or period.
3. Provide an Account on all VAT Sales, Expenses, as well as other Inputs
The necessary information on VAT sales and expenses a business made in a single financial year has to be submitted to the FTA. Details such as exempt supplies and zero-rated supplies among others have to be mentioned. The details that are made regarding expenses at a rate of five percent, which is the current VAT rate, have to be mentioned as well.
4. Provide Calculations Regarding Net VAT due to the FTA
As soon as the details on VAT sales, expenses, as well as other related inputs have been submitted, there is also the need to produce calculations of net VAT due by the business. The VAT due amount that is higher compared to the recoverable amount has to be paid to the tax authority. If the recoverable amount is higher compared to what’s due to the FTA, then the amount can be refunded back to the business through the process of VAT reclaim or refund. The calculation that is to be provided to the FTA represents the business’ payable tax for every particular tax period.
5. Furnish a Declaration
For the last step, a declaration has to be submitted regarding the accuracy of all information submitted to the FTA.
This is the process for filing VAT returns with the Federal Tax Authority in the UAE. It is essential for a business entity to be cautious when furnishing details to the FTA regarding the VAT return. Supplying inaccurate information can result to fines of thousands of dirhams. The option in preventing the accumulation of massive fines and penalties from incorrect details for VAT return filing is by hiring a VAT specialist or regulated tax agent in Dubai.
The reason for this is because a professional can help ensure the business has submitted verified information that guarantees it does not get penalized. The expert can also help you carry out the process without much of your involvement. In addition, a tax regulated agent in Dubai is well-versed regarding VAT legislation, as well as the implementation of procedures that may be requested by the tax authoritative body in the UAE.
If you wish to file VAT returns as hassle-free and as quickly as possible, don’t hesitate to contact VAT Registration UAE. Initial consultations are free-of-charge.