VAT Return Filing in the UAE: A Step-by-Step Guide

Filing VAT returns in the UAE is an essential task for businesses to ensure compliance with the tax authority’s regulations. Failure to submit accurate VAT returns or missing deadlines can lead to penalties and interest, affecting your business operations. This blog will walk you through the VAT return filing process, highlighting key deadlines and providing tips to ensure that your business stays compliant and avoids penalties.

What Are VAT Returns?

VAT returns are periodic reports that businesses in the UAE must file with the Federal Tax Authority (FTA). These returns summarize the amount of VAT a business has collected from customers (output VAT) and the VAT it has paid on its own purchases (input VAT). The difference between output VAT and input VAT is the amount a business either owes to the FTA or is entitled to claim back as a refund. Filing VAT returns correctly is crucial to ensure that your business complies with UAE VAT laws and avoids unnecessary penalties or audits.

Who Needs to File VAT Returns?

All businesses that are VAT-registered in the UAE are required to file VAT returns. This includes businesses that have met the mandatory VAT registration threshold of AED 375,000 in taxable supplies, as well as businesses that have voluntarily registered for VAT. VAT returns must be filed on a regular basis, either quarterly or monthly, depending on the size of the business and its VAT liability.

Key Deadlines for VAT Return Filing

The deadline for filing VAT returns in the UAE is set by the FTA and is crucial for businesses to meet to avoid late fees and penalties.

Filing Frequency:

• Quarterly Filing: Most businesses with lower VAT turnover file VAT returns on a quarterly basis. Each quarter ends on the last day of March, June, September, and December.

• Monthly Filing: Businesses with high VAT turnover or larger VAT liabilities are required to file monthly VAT returns.

Filing Deadline:

The deadline for submitting VAT returns is the 28th day of the month following the end of the VAT period. For example:

• The VAT return for the first quarter (January–March) must be filed by April 28.

• The VAT return for the second quarter (April–June) must be filed by July 28.

If the 28th day falls on a weekend or public holiday, the deadline is extended to the next working day.

The VAT Return Filing Process: Step-by-Step

Step 1: Gather Your Records and Documents

Before you start the VAT return filing process, ensure that all your documents are organized and accessible. The FTA requires businesses to report:

• Sales and output VAT: The total amount of VAT collected from customers on sales transactions.

• Purchases and input VAT: The total amount of VAT paid on purchases from suppliers, including any imports.

• Exemptions and zero-rated supplies: If applicable, businesses must report any exempt or zero-rated goods and services they have provided or received.

Ensure that all invoices, receipts, and supporting documents are readily available, as these will be used to calculate the VAT amounts.

Step 2: Log in to the FTA e-Services Portal

The FTA provides an online platform for VAT return filing, where businesses can submit their returns electronically. To file your VAT return:

• Go to the FTA e-Services portal.

• Log in with your registered credentials (username and password).

• Navigate to the VAT section of the portal.

Step 3: Complete the VAT Return Form

Once you are logged into the FTA portal, you can access the VAT return form. The form requires you to input various details, including:

• Output VAT: The VAT charged on your sales during the VAT period.

• Input VAT: The VAT paid on business purchases and expenses during the VAT period.

• Net VAT Payable or Refundable: The difference between output VAT and input VAT. If output VAT exceeds input VAT, you will need to pay the FTA the difference. If input VAT exceeds output VAT, you may be entitled to a VAT refund.

The FTA portal will guide you through filling out the necessary fields. Ensure that the numbers match the sales and purchase invoices and that all relevant data is accurate.

Step 4: Review and Submit Your VAT Return

After completing the VAT return form, take time to double-check the information for accuracy. Ensure that:

• The VAT amounts are correct.

• Any exemptions or zero-rated supplies are correctly accounted for.

• There are no discrepancies between your sales and purchase records.

Once you are satisfied that everything is accurate, submit the VAT return electronically through the FTA portal.

Step 5: Pay VAT Due (If Applicable)

If your business owes VAT to the FTA, you must make the payment by the return’s due date (the 28th of the following month). The FTA provides various payment options, including online bank transfers, debit/credit cards, and other methods available through the e-Services portal. It is important to make the payment on time to avoid late payment penalties, which can accrue interest on the unpaid amount.

Step 6: Keep a Record of Your Submission

After submitting the VAT return, the FTA will generate a confirmation receipt. Keep this record for your files, as it serves as proof of compliance and submission. You will also be able to access the filed return through the FTA portal for reference and future audits.

Common Mistakes to Avoid When Filing VAT Returns

To ensure that your VAT return filing goes smoothly, avoid these common mistakes:

• Inaccurate VAT Calculation: Ensure that VAT calculations are correct to avoid underpayment or overpayment.

• Missing Deadlines: Late filing of VAT returns can result in penalties. Always adhere to filing deadlines.

• Incorrect Record-Keeping: Failing to maintain proper records can lead to errors in VAT returns. Keep accurate and organized records to simplify the filing process.

• Failure to Report All Transactions: Ensure all taxable sales, exempt supplies, and zero-rated items are correctly reported in the VAT return.

How VAT Compliance Affects Your Business

Filing VAT returns accurately and on time not only ensures legal compliance but also enhances your business’s credibility with the tax authorities. By adhering to VAT requirements, businesses can:

• Avoid fines, penalties, and interest charges.

• Maintain a smooth cash flow by staying on top of VAT payments and refunds.

• Build a reputation as a responsible business with a solid tax track record, which can be beneficial for future transactions and partnerships.

How Young and Right Can Help

At Young and Right, we understand that VAT return filing can be complex, and we are here to assist you every step of the way. Our team of VAT professionals ensures that your VAT returns are filed accurately and on time, so you can focus on growing your business.

1. VAT Return Preparation:

We handle the preparation and submission of VAT returns, ensuring that all calculations are accurate and that deadlines are met.

2. Timely Filing:

We ensure that your VAT returns are filed on time, avoiding penalties and ensuring that you remain compliant with UAE tax laws.

3. Record-Keeping Support:

We help you maintain organized records of all VAT-related transactions, ensuring that your business is audit-ready.

4. VAT Payment Guidance:

We assist with calculating VAT payments due and ensure that payments are made on time to avoid late fees.

5. Ongoing VAT Advisory:

We provide ongoing support and advice to help you manage VAT efficiently, including strategies for minimizing VAT liabilities. Partnering with Young and Right allows you to stay compliant with VAT regulations and ensures that your VAT returns are filed with minimal stress, keeping your business running smoothly.

Conclusion

VAT return filing is a critical part of VAT Compliance in the UAE. By following the steps outlined in this guide and avoiding common mistakes, businesses can ensure that their VAT returns are filed accurately and on time, avoiding penalties and maintaining good standing with the FTA. With the support of Young and Right, you can streamline your VAT filing process, stay compliant, and focus on what matters most—growing your business in the UAE.