Returns Filing

How to file your returns:

Tax Period

The standard Tax Period applicable to a Taxable Person shall be a period of three calendar months ending on the date that the FTA determines.
The FTA may, at its discretion, assign a different Tax Period, other than the standard one, to a certain group of Taxable Persons
In some cases businesses may be required to file VAT returns on a monthly basis)
Where a Taxable Person is assigned the standard Tax Period, he may request that the Tax Period ends with the month as requested by him, and the FTA may accept such a request at its discretion.

Return Submission

The VAT Return must be received by the FTA no later than the 28th day following the end of the Tax Period concerned or by such other date as directed by the FTA.
Where a payment is due to the FTA, it must be received by the FTA by the same deadline.
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.
No business transaction, requirement to submit nil return

Basic Information

Data in the Basic Information is automatically populated based on Registration Details, and no direct input is required from the Taxpayer.

Declaration Fields

If the Profit Margin Scheme has been applied you are required to disclose the same in the Profit Margin Scheme section
In the Declaration section the Authorized Signatory is required to attest to the accuracy of the information filed in the return

STANDARD RATED SUPPLIES

Include

The supply of goods and services subject to VAT at 5%
Supplies of goods and services at a discounted rate (after deducting the discount value)
Deposits received as part payment
Inter-company sales (where you don’t have a Tax Group registration in place)
The sale of business assets
Deemed supplies, which are above the relevant limits
Reimbursements of expenses from customers (Recharges)
The full value of goods sold under the profit margin scheme
Supplies of goods located within Designated Zones where the goods are consumed within the Designated Zone
Reductions in value due to credit notes issued; or
Errors that you are allowed to correct for previous Tax Periods.

Exclude

Sales of goods located within designated zones which are not consumed within the designated zone
Out of scope supplies
Zero-rated supplies, such as exports of goods or services outside the UAE, zero-rated educational services and zero-rated healthcare services
Disbursements.

Adjustment Columns

Record any adjustments made to the output tax due as a result of any claims for VAT bad debt relief
Record any adjustments made to the output tax due as a result of sales of taxable commercial property in the UAE

WHILE ENTERING AMOUNTS

All amounts in the Amount Column are to be stated Net of VAT
Only Tax errors below AED 10,000 are allowed to be rectified in the current periods returns
Standard Rated Supplies are required to be segregated by Emirate:
- For Businesses with Fixed Establishment in the UAE: The Emirate in which the Emirate where the fixed establishment mostly closely connected to the supply is located.
- For Non established business: The Emirate in which the supply was received.

If the Tax value of an error committed in the prior Return Period exceeds AED 10,000 you may be required to file a Voluntary Disclosure

CONTROL CHECKLIST

Close the Month, booking all Invoices and Credit Notes, and reconciling all operational Bank Accounts
Reconcile and Manually account for advances (Standard Rated) received during the Tax Period
Reconcile Intercompany accounts and ensure Tax is calculated (If not in a Tax Group)
Identify any cases of Deemed Supplies and manually account for VAT. These may be categorized as promotion expenses etc.
Reconcile Revenue booked with Taxable Supplies reported.

It is generally advisable that the Taxable Supplies calculated be manually reconciled against the Revenue as per the TB. This ensures that all causes of difference are known.

IMPORTS & RCM

In field 3 Include

Services received from foreign suppliers which are subject to the standard rate of VAT
Services received from foreign suppliers which are subject to the zero rate of VAT
Goods received which are subject to the reverse charge provisions and have not been declared to UAE customs
Local supplies subject to the reverse charge provisions

Field 6 is Automatically Populated

If any imports appear to have been excluded from FIELD 6 or appear to be incorrect, when comparing them to the amounts reported in your customs import declarations, make adjustments accordingly IN FIELD 7

Control Checklist

Ensure that RCM is booked for all Imports of Goods and Services
Reconcile the RCM booked for Imported Goods against the amount prepopulated in field 6 of the return (Details are available in the FTA Portal)
Adjust any differences in field 7

Even if prepopulated records are not accurate, it is the taxpayers responsibility to make the necessary adjustments. This is the case even if the net effect of the RCM is nil.

ZERO RATED AND EXEMPT SUPPLIES

Zero Rated Supplies

Include

Exports of goods and services outside the UAE.
Local supplies of certain educational services and related goods and services
Local supplies of certain healthcare services (e.g. preventive and basic healthcare services and related goods and services)
Supplies or imports of investment precious metals
Supplies of crude oil and natural gas

Exempt Supplies

Include

Local supplies of certain financial services
Supplies of residential buildings through sale or lease, other than the ones subject to the zero rate of VAT
Supplies of bare land
Supplies of local passenger transport

STANDARD RATED EXPENSES

In Field 9 Include

Goods or services purchased for business purposes from VAT registered suppliers that were subject to VAT at 5%
Goods or services which were purchased at a discount
The total price that you have paid for the goods purchased, which you are selling under the profit margin scheme
Goods or services purchased before your tax registration and for which you wish and are able to claim the tax incurred. The claim must be made in your first VAT return
Reductions in value due to credit notes received from suppliers
Errors that you are allowed to correct for previous tax periods.

Exclude

Exempt or zero-rated purchases
Expenses which were incurred to make exempt or non-business supplies
Purchases of goods located within designated zones which were not consumed in the designated zone or subsequently imported into the UAE mainland
Purchases from members of the same tax group
Fines and penalty charges received e.g. Traffic fines
Wages and salaries
Expenses where the input tax is specifically disallowed

Adjustments Column

Record any adjustments made to the input tax due as a result of any claims for VAT bad debt relief made by your supplier,
Record any input tax apportionment annual adjustments
Record any capital assets scheme adjustments

Control Checklist

Close the Month, booking all Invoices and Credit Notes, and reconciling all operational Bank Accounts
Reconcile and Manually account for pre-paid expenses (Standard Rated) settled during the Tax Period
Reconcile Intercompany accounts and ensure Tax is calculated (If not in a Tax Group)
Petty cash related expenses to be captured
Reconcile Expenses booked, with Standard Rated Expenses reported.
Review expenses to ensure that:
- Expenses incurred purely for exempt/non-business purposes are segregated
- Expenses commonly incurred for taxable and non taxable purposes are segregated
Manually calculate the portion of common input tax to be claimed.
Ensure that Cut off procedures are in place. For e.g. Invoices of March should not be claimed in the February return

SUPPLIES SUBJECT TO REVERSE CHARGE

In Field 10 Include

Services received from foreign suppliers which are subject to the standard rate of VAT and for which you are eligible to recover any VAT (Reported in FIELD 3)
Services received from foreign suppliers which are subject to the zero rate of VAT (Reported in FIELD 3)
Goods received which are subject to the reverse charge provisions and have not been declared to UAE customs (e.g. through an import declaration) and for which you are eligible to recover any VAT (Reported in FIELD 3)
Local supplies subject to the reverse charge provisions (e.g. specific supplies within the oil and gas industry) and for which you are eligible to recover any VAT (Reported in FIELD 3)
Imports of goods into the UAE through UAE customs that have already been reported in your customs declarations and for which you are eligible to recover any VAT (Reported in FIELD 6 and/or FIELD 7)
Imports of goods from agents on behalf of an unregistered person (Reported in FIELD 6 and/or FIELD 7)

Net VAT Due

The following fields will indicate your payable tax for the Tax Period.

In case of refunds, there are two options;

Carry forward of refunds
Claim refund thro Form 311

PAYMENT MODE

Following payment modes can be adopted:

Payment via e-Dirham Card or Credit Card

Payment via e-debit thro nominated banks

Payment mode – GIBAN

A GIBAN is a unique IBAN number that is given to every taxable person.
A taxable person can make a fund transfer from certain UAE financial institution using the GIBAN provided by the FTA.
This payment method can be used for settling any outstanding VAT and Excise Tax amounts payable including tax and penalties.
This option should not be used for other payments such as Miscellaneous Payments.

GENERAL GUIDANCE

Start the process early, ideally certain process with monthend closing and reporting after month closing
Maintain the details relating to each information box collated in a common excel/system file. This is easier in case of a specialised VAT tool where even FAF can be easily generated
All documentation review and archiving process to be done while filing the VAT Returns
Ensure that the payment methodology and funds are kept ready for return filing.

In order to convert foreign currency to AED values, it is required to use the currency rate on the date of supply. The currency rates are published each week by the UAE Central Bank specially for VAT purposes.

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%)