Value Added Tax Services

All you need to know about Value Added Tax (VAT)

how to file a VAT return in the UAE

Introduced in the UAE on 1 January 2018, Value Added Tax (VAT) is a tax applied on the consumption or use of goods and services. VAT will provide the UAE with a new source of income which the government will utilize to improve the public service quality. If you’re new to the term, keep reading.

What is VAT?

The Federal Tax Authority (FTA)  in the UAE requires every taxable person registered for UAE VAT to file a return at the end of each Tax period. At the point of sale, a VAT of 5 percent is imposed, which is collected and accounted for by businesses on behalf of the government. The VAT Return should not be received later than the 28th day following the end of the tax period according to Article 64 of the Executive Regulations VAT UAE Decree-Law. The Standard Tax Period for filing the VAT Return in the UAE is defined by the regulations as a three-calendar-month ending on the date determined by the authorities. Non-filing or late-filing can have severe consequences, like fines and penalties.

Advantages of VAT

The imposition of VAT has several advantages to offer. Here is a list of some of them:

  • Since VAT is a consumption tax imposed on final consumers, the revenue generated will be constant.
  • In contrast with other indirect taxes, VAT is comparatively easy to manage.
  • Due to its catch-up effect, it minimizes avoidance.
  • It can generate vast amounts of revenue at a low tax rate.
  • The consumers do not feel burdened as the VAT has to be paid in small installments.
  • It is a neutral tax, with its application to all types of business.

What are the necessary details?

VAT return should contain all the necessary details as requested by the FTA according to the UAE VAT Law. Therefore, you should have an insight into VAT payment methods in the UAE.

Here is a list of information that you  should include in the tax return:

  • The name, address, and the TRN of the registering person.
  • Tax Period of the filing
  • The date of submission
  • Value of Taxable Supplies during the Tax Period and the Output Tax charged and Emirates-wise
  • Value of Taxable Supplies subject to the zero rates made by the Person in the Tax Period
  • The value of Exempt Supplies in the Tax Period.
  • The value of any supplies subject to Clauses (1) and (3) of Article (48) of the Decree-Law (Reverse Charge)
  • The value of expenses in respect of which the Person seeks to recover Input Tax and the amount of Recoverable Tax.
  • Value of the total Due Tax and Recoverable Tax for the Tax Period.
  • The Payable Tax for the Tax Period

What is the Method?

The UAE VAT return can be filed online only through FTA’s portal. The FTA doesn’t accept any offline VAT return filing yet in the UAE, and must file the return in the VAT 201 form. The VAT 201 form is made accessible to all the registrants as soon as the tax period ends. The tax returns are by tax agents on behalf of the taxable persons. Registrants need to check the following details once they login into the FTA portal and select the VAT 201 form:

  • Standard Rated Supplies
  • Zero-rated Supplies
  • Goods imported into the UAE
  • Adjustments to the goods imported into the UAE
  • Standard-rated expenses
  • Calculation of due tax
  • Refund of recoverable tax
  • Tourist Tax refunds
  • Exempt Supplies

To Wrap Up:

This guide is the answer if you’ve wondered how to file a VAT return in the UAE. Make your returns timely and correctly to avoid any hefty penalties. If you’re looking for a good VAT consulting company, Harbins has you covered.

One thought on “All you need to know about Value Added Tax (VAT)

  1. Lunette UK says:

    Great content! Keep up the good work!

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