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    VAT Return Filing in UAE

    With the coming of Value Added Tax (VAT) in the UAE in 2018, businesses are now obliged to follow VAT regulations, including the accurate and timely submission of VAT returns. Filing a VAT return is very important for tax compliance as it requires businesses to declare their taxable supplies, input VAT, and VAT payable to the Federal Tax Authority (FTA). Vigor Accounting & Taxation offers a complete VAT return filing service to assist businesses in meeting their legal obligations, avoiding penalties, and optimizing their VAT management processes.

    With the coming of Value Added Tax (VAT) in the UAE in 2018, businesses are now obliged to follow VAT regulations, including the accurate and timely submission of VAT returns. Filing a VAT return is very important for tax compliance as it requires businesses to declare their taxable supplies, input VAT, and VAT payable to the Federal Tax Authority (FTA). Vigor Accounting & Taxation offers a complete VAT return filing service to assist businesses in meeting their legal obligations, avoiding penalties, and optimizing their VAT management processes.

    Understanding VAT Filing in the UAE

    Value Added Tax (VAT) is an indirect tax borne by the consumption of goods and services at all stages of production and delivery. In the UAE, the standard VAT is levied at a rate of 5%, applying to most of the goods and services, with a few items being either exempt or zero-rated. Businesses that are registered for VAT are obligated to collect VAT from the customers on the taxable supplies and are also allowed to recover the VAT paid on their business-related expenses.

    VAT returns are usually filed quarterly or monthly based on the size and the nature of the business. The filing of VAT returns is the fundamental process for businesses to declare their VAT liabilities and recover any input VAT that can be claimed.

    Who Needs the Filing of VAT Returns in the UAE

    Registered VAT businesses with the Federal Tax Authority (FTA) should file VAT returns as required. Companies that reach the annual turnover threshold of AED 375,000 for compulsory VAT registration are also included in this. Apart from the above, the companies registered for VAT, which did so on a voluntary basis to of going above the voluntary threshold of AED 187,500 also file returns must do so. Companies that are registered for VAT have to, by law, submit their VAT returns even if they are not taxable for the tax period. Not meeting the deadline of the filing of the returns and the result, the fine and penalties may be charged by the FTA.

    Penalties for Late VAT Return Filing

    The FTA imposes penalties for late or incorrect submission of VAT TAX returns. Penalties can include

    • First Instance

      AED 1,000 for the first instance of late filing.

    • Subsequent Instances

      AED 2,000 for subsequent instances of late filing within a 24-month period.

    • Additional Penalties

      Additional penalties may apply if there are inaccuracies or if the VAT payment is delayed.

    Working with professionals like Vigor Accounting & Taxation can help businesses avoid these penalties by ensuring that VAT returns are filed accurately and on time.

    Key Components of VAT Return Filing

    When filing VAT returns in the UAE, businesses are required to report specific financial data to the FTA. The key components of a VAT return include

    01

    Output VAT
    Output VAT refers to the VAT collected on the sale of goods and services. Businesses must calculate the total value of taxable supplies made during the VAT period and report the corresponding VAT collected from customers.

    02

    Exempt and Zero-Rated Supplies
    Businesses must also report any exempt or zero-rated supplies separately in their VAT returns. Exempt supplies do not incur VAT, while zero-rated supplies are subject to a 0% VAT rate, allowing businesses to recover input VAT on related expenses.

    03

    Input VAT
    Input VAT is the VAT that businesses pay on purchases of goods and services for their operations. Businesses are allowed to recover this VAT, provided the expenses are directly related to their taxable supplies. Input VAT can be claimed as a deduction against output VAT.

    04

    Net VAT Payable
    The net VAT payable is the difference between output VAT and input VAT. If the output VAT exceeds the input VAT, the business must pay the difference to the FTA. If the input VAT exceeds the output VAT, the business can claim a refund or carry forward the excess to future VAT periods.

    05

    Adjustments
    Adjustments may need to be made for corrections, bad debts, or changes in taxable supplies. Businesses must ensure that these adjustments are accurately reflected in their VAT returns to avoid discrepancies.

    01

    Output VAT
    Output VAT refers to the VAT collected on the sale of goods and services. Businesses must calculate the total value of taxable supplies made during the VAT period and report the corresponding VAT collected from customers.

    02

    Exempt and Zero-Rated Supplies
    Businesses must also report any exempt or zero-rated supplies separately in their VAT returns. Exempt supplies do not incur VAT, while zero-rated supplies are subject to a 0% VAT rate, allowing businesses to recover input VAT on related expenses.

    03

    Adjustments
    Adjustments may need to be made for corrections, bad debts, or changes in taxable supplies. Businesses must ensure that these adjustments are accurately reflected in their VAT returns to avoid discrepancies.

    04

    Input VAT
    Input VAT is the VAT that businesses pay on purchases of goods and services for their operations. Businesses are allowed to recover this VAT, provided the expenses are directly related to their taxable supplies. Input VAT can be claimed as a deduction against output VAT.

    05

    Net VAT Payable
    The net VAT payable is the difference between output VAT and input VAT. If the output VAT exceeds the input VAT, the business must pay the difference to the FTA. If the input VAT exceeds the output VAT, the business can claim a refund or carry forward the excess to future VAT periods.

    Steps for Filing VAT Returns in the UAE

    At Vigor Accounting & Taxation, we simplify the VAT return filing process, ensuring full compliance with FTA regulations. Here’s a step-by-step overview of the VAT return filing process

    01
    Gathering Financial Data
    The first move is to compile every important financial document, such as sales invoices, receipts, and also expense documents that relate to the tax period, in the VAT period. The right bookkeeping is the key to having each entry taken account of correctly and also to correct categorization.
    02
    Accessing the FTA Portal
    VAT returns in the UAE are submitted on the FTA’s e-Services portal. Companies are required to login using their FTA username with their TRN (Tax Registration Number) and then download the VAT return form through the portal.
    03
    Submitting the VAT Return
    Once the form is completed, businesses must submit the VAT return before the deadline specified by the FTA. The due date is typically 28 days after the end of the tax period. Late submissions can result in penalties.
    04
    Calculating VAT Liability
    Businesses should find the right amount of VAT output (sales-related VAT received) and VAT input (VAT paid on purchases) to make the VAT return. These figures are necessary to know the VAT due or refundable.
    05
    Completing the VAT Return Form
    In the VAT return form, businesses must enter the total amount of taxable, exempt, and zero-rated supplies. They also have to show how much output VAT they charged and how much input VAT they paid. Making sure all the information is right is very important since mistakes could result in penalties.
    06
    Paying VAT (if applicable)
    If there happens to be a net VAT payable, firms are obliged to clear the amount which is overdue by the VAT filing date. Payments can be done by different means, including bank transfers and the FTA’s online payment options.

    Challenges Faced by Businesses in VAT Return Filing

    Filing VAT returns can be challenging for businesses, particularly those without a dedicated accounting team or sufficient knowledge of VAT regulations. Some common challenges include

    01
    Accurate Record-Keeping
    Maintaining accurate financial records is crucial for filing VAT returns. Businesses that do not keep detailed records may struggle to report their VAT liabilities correctly.
    02
    Complex VAT Calculations
    Calculating output VAT, input VAT, and adjustments can be complex, especially for businesses with multiple revenue streams and varying types of supplies.
    03
    Compliance with FTA Regulations
    The FTA has strict rules regarding VAT return submissions, and businesses must ensure that they are fully compliant to avoid penalties.
    04
    Time Constraints
    Filing VAT returns within the deadlines set by the FTA requires timely preparation and submission. Many businesses find it difficult to manage this process alongside their daily operations.

    How Vigor Accounting & Taxation LLC Can Help You with VAT Filing Services

    At Vigor Accounting & Taxation, we provide a comprehensive suite of VAT return filing services tailored to the specific needs of businesses in the UAE. Our expert team ensures that your VAT returns are accurate, compliant, and submitted on time, helping you avoid penalties and streamline your VAT management processes.

    End-to-End VAT Filing icon

    End-to-End VAT Filing Services

    From the collecting of financial data to the computation of VAT liabilities and the filing of VAT returns, we handle the entire work. We make sure that all VAT records are correct, legal, and arranged thus enabling you to focus on your business.
    VAT Advisory icon

    VAT Advisory and Support

    Our VAT filing expert’s guide’s business participants to understand their VAT obligations and streamline their processes as much as it is possible. We give support with regard to the planning for VAT, to make sure that all businesses slaves are effaced while minimizing VAT liabilities.
    Compliance  icon

    Compliance with FTA Regulations

    Compliance with UAE tax regulations is our primary concern. We take in the latest FTA directives and the full compliance of your VAT returns are to the required laws and regulations as a result of our teamwork.
    Error-Free Submissions icon

    Error-Free Submissions

    Our crew executes a deep survey of your VAT returns and make sure there are no errors, inconsistencies, and miscalculations that could result in penalties. We countercheck all calculations, records, and entries to ascertain accuracy.

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