VAT in GCC
UAE Government releases VAT Returns Filing Guide
All UAE taxpayers should file VAT returns with the Federal Tax Authority (FTA) on a quarterly basis. Returns must be filed according to the procedures specified in the VAT legislation, within 28 days from the end of the tax period. Taxpayers will file their returns using the e-services portal.
To make the process a smooth one for the taxpayer, the government has released a VAT Returns user guide to help in the navigation of the e-Services Portal and meet the compliance obligations in respect of VAT Return filing, payments of tax and obtaining VAT refunds.
You may read the VAT Returns Filing Guide by clicking here.
Some of the important points from the VAT Return guide are summarized as below:
- Name of the Form to file VAT Return is VAT 201
- Name of the Form to claim Input refund is VAT 311
- The return can be submitted by the Taxable Person, or another person who has the right to do so on the Taxable Person’s behalf (for example, a Tax Agent or a Legal Representative)
- Where the due date for the submission of the VAT Return and the corresponding payment falls on a weekend or a national holiday, the deadline for filing the VAT Return or making a payment is extended to the first business day thereafter
- If there is no business transaction for the Tax Period, you are required to submit a “nil” VAT Return by the respective due date
- Once the date of the supply has taken place, the Taxable Person must account for the output tax in the VAT Return covering that Tax Period
- Supplies within Designated Zone, out of scope supplies and disbursements are not required to be reported in VAT return
- One can also make adjustments in the pre-populated VAT amount on import of goods in case there is any error at customs end
- For an excess amount, one can either apply for refund for that tax period in Form VAT 311 or can carry forward that amount to next period
- VAT Returns must be submitted within the specified deadline, otherwise, a penalty of AED 1,000 will be imposed for the first time of occurrence of a delay. In case of repetitive non-compliance within 24 months, the penalty will be increased to AED 2,000 for each offense
- If one do not submit a VAT Return by the specified due date, the FTA may issue a tax assessment to you with an estimate of the payable tax. In such a case, you may be required to pay any payable tax assessed, penalty on non-submission of tax return and/or late payment penalty upon the issuance of the tax assessment (as applicable).
- Tax needs to be paid after the submission of VAT return but within the due date for that tax period; and
- Following the submission of a VAT Return, the reported Payable Tax must be settled within the deadline. Failure in the payment before the due date would result in a late payment penalty consisting of:
- (2%) of the unpaid tax immediately levied once the payment of Payable Tax is late
- (4%) is due on the seventh day following the deadline for payment, on the amount of tax which is still unpaid
- (1%) daily penalty charged on any amount that is still unpaid one calendar month following the deadline for payment with an upper ceiling of (300%)
An Overview of VAT Returns Filing
What is the VAT Return: The official document to be completed by the Taxable Person and submitted to the Federal Tax Authority (“FTA”) at regular intervals detailing any output tax due and input tax recoverable and including any other information that is required to be provided. In this guide, we will refer to it as the “VAT return”.
All VAT Returns should be submitted online using the FTA portal. The return can be submitted by the Taxable Person, or another person who has the right to do so on the Taxable Person’s behalf (for example, a Tax Agent or a Legal Representative).
Companies are required to file returns periodically. Initially, companies will be expected to file returns every quarter or monthly depending on their turnover.
By the end of each filing period business must compile the data on tax paid and tax collected and file the returns following the computation guidelines. A tax liability can accrue as early as the date on which an order advance is received. If no advance is received then the date of delivery or invoice, whichever is earlier will be taken into consideration.
- Sales Returns
- Companies will be allowed to reverse the tax paid on Sales returns.
- Bad Debts
- The Law will have a provision to account for bad debts and recover the tax paid on such transactions.
Audit of Records
The government may directly or through its appointed agents demand to audit the tax returns of the companies. Companies are required to maintain physical records of all purchases and supplies as also maintain complete registration details of suppliers and customers.
Although a completely digital system for tax filing will be in place, the government may expect companies to furnish proof of returns.
The VAT will be based on Self-Assessment and the onus will be on the companies to accurately account for the output and input tax.