VAT Filing and Payment in the UAE: Key Deadlines and Requirements

Since the introduction of Value Added Tax (VAT) in the UAE in 2018, businesses have been required to comply with VAT regulations set by the Federal Tax Authority (FTA). One of the most critical aspects of VAT Compliance is the accurate filing of VAT returns and timely payment of VAT liabilities. However, many businesses face challenges in meeting the deadlines, maintaining proper records, and ensuring accurate VAT calculations. This guide provides a detailed overview of VAT filing and payment in the UAE, covering key deadlines, submission requirements, common mistakes, and best practices to avoid penalties.

Understanding VAT Filing in the UAE

VAT-registered businesses in the UAE must periodically file VAT returns with the Federal Tax Authority (FTA). The VAT return is a summary of a business’s output VAT (collected from customers) and input VAT (paid on business expenses). Based on this return, businesses either pay their VAT liabilities to the FTA or claim a VAT refund if their input VAT exceeds output VAT.

Who Needs to File VAT Returns?

All businesses registered for VAT must file VAT returns, including:

• Mainland UAE businesses selling taxable goods and services.

• Free zone companies involved in VAT-eligible activities.

• Foreign companies operating in the UAE that meet VAT registration criteria.

• Businesses that voluntarily registered for VAT (revenue exceeding AED 187,500).

VAT Filing Frequency and Deadlines

VAT filing deadlines in the UAE depend on the tax period assigned to a business by the FTA. Businesses can have monthly or quarterly VAT return periods based on their revenue and industry.

Standard VAT Return Periods

• Quarterly Filing: Most businesses file VAT returns every three months.

• Monthly Filing: Large businesses (with annual revenue exceeding AED 150 million) must file VAT returns every month.

Key VAT Return Deadlines Explained

VAT returns must be filed and paid within 28 days after the end of each tax period. If the deadline falls on a weekend or public holiday, it is extended to the next working day. For businesses that file quarterly VAT returns, the deadlines for submission and payment are as follows:

• For the tax period from January to March, VAT returns must be filed by April 28.

• For the tax period from April to June, VAT returns must be filed by July 28.

• For the tax period from July to September, VAT returns must be filed by October 28.

• For the tax period from October to December, VAT returns must be filed by January 28 of the following year.

For monthly VAT filers, VAT returns must be submitted on the 28th of the following month. For example, if a company is filing for January, the return must be submitted by February 28. Businesses should ensure that VAT payments are made before the due date to avoid penalties.

Step-by-Step Guide to Filing VAT Returns in the UAE

Businesses must file their VAT returns through the FTA’s online portal. Below is a step-by-step process for submitting VAT returns and making VAT payments.

Step 1: Log in to the FTA Portal

• Visit the FTA e-Services portal (https://eservices.tax.gov.ae).

• Use your username and password to log in to your account.

Step 2: Access the VAT Return Form

• Navigate to the VAT section and select VAT201 - VAT Return Form.

• Review your business details and ensure they are correct before proceeding.

Step 3: Fill in the VAT Return Details

Businesses must accurately report VAT transactions for the tax period, including:

• Output VAT: VAT collected from sales and services.

• Input VAT: VAT paid on business expenses.

• Total VAT due: Net VAT payable to the FTA or refundable VAT amount.

Step 4: Review and Submit the VAT Return

• Double-check the information to avoid errors.

• Click Submit to file your VAT return electronically.

Step 5: Make the VAT Payment

If VAT is due, businesses must pay the outstanding amount to the FTA before the deadline. VAT payments can be made via:

• E-dirham or credit card through the FTA portal.

• Bank transfers to the FTA account via UAE Central Bank.

• Exchange houses or designated VAT payment centers.

Common Mistakes Businesses Make When Filing VAT Returns

1. Late VAT Filing and Payment

Missing VAT filing deadlines results in automatic penalties imposed by the FTA:

• AED 1,000 for the first missed deadline.

• AED 2,000 for any subsequent delays within 24 months.

2. Incorrect VAT Calculations

Businesses often miscalculate input and output VAT, leading to:

• Underpayment of VAT, resulting in additional penalties.

• Overpayment of VAT, affecting cash flow.

3. Filing Incorrect VAT Returns

• Reporting VAT-exempt goods as taxable can trigger compliance issues.

• Claiming input VAT on non-eligible expenses can result in FTA audits and penalties.

4. Not Keeping Proper VAT Records

• Businesses must maintain VAT records for at least 5 years.

• Lack of invoices, receipts, or proper documentation may result in FTA audits and fines.

5. Failing to Claim VAT refunds

Some businesses forget to claim input VAT refunds, which can help optimize cash flow.

How Young and Right Can Help

At Young and Right, we provide expert VAT Compliance services to help businesses manage their VAT filings efficiently and avoid penalties. Our team ensures accurate tax reporting, timely VAT submissions, and strategic tax planning to optimize VAT payments.

1. VAT Return Filing and Compliance Support

• Ensuring accurate VAT return submission to the FTA.

• Managing VAT calculations to prevent underpayments or overpayments.

• Helping businesses stay ahead of filing deadlines to avoid penalties.

2. VAT Payment Assistance

• Guiding businesses on VAT payment methods and deadlines.

• Ensuring correct VAT payments are made to the FTA’s designated accounts.

3. VAT Record-Keeping and Documentation

• Assisting businesses in maintaining proper VAT records for compliance and audits.

• Reviewing invoices, receipts, and purchase records to ensure correct VAT claims.

4. VAT Refund Claims and Audit Preparation

• Helping businesses claim VAT refunds efficiently.

• Preparing businesses for FTA VAT audits by ensuring full compliance with tax laws.

5. Ongoing VAT Advisory Services

• Keeping businesses updated on new VAT regulations and tax law changes.

• Providing customized VAT strategies for better financial management.

Conclusion

VAT filing and payment are essential compliance requirements for UAE businesses. Missing filing deadlines, incorrect VAT calculations, and poor record-keeping can result in penalties and cash flow disruptions. To stay compliant and optimize VAT payments, businesses should follow best practices, maintain accurate VAT records, and seek expert guidance. Partnering with Young and Right ensures that your VAT returns are filed correctly and on time, preventing costly errors and improving compliance. Contact us today to manage your VAT obligations efficiently and keep your business tax-compliant in the UAE.