Procedures and Returns under UAE VAT
Procedures and Returns under UAE VAT
Article (71) of the Decree Law
VAT Return, also known as ‘Tax return’ is a periodical statement which a registered person needs to submit to the authority. The details and data to be furnished in the VAT return for the purpose of tax are specified in the UAE VAT executive regulations. All the details as required in VAT Return need to be prepared in accordance with the VAT Return format issued by the authority.
Tax period is a specific period of Time for which the taxable person shall calculate and pay tax. At the time of allotment of the Tax Registration Number the Authority has specified the tax period for each Tax Payer (In some cases, return period was amended after issuance of the TRN & same is updated in the online FTA Dashboard, of entity login). However Authority may assign a Person or class of Persons a shorter or longer Tax Period where it considers that a nonstandard Tax Period length is necessary or beneficial to:
- Reduce the risk of Tax Evasion.
- Enable the Authority to improve the monitoring of compliance or collection of Tax revenues.
- Reduce the administrative burden on the Authority or the compliance burden on a Person or class of Persons.
Article (72): Submission of Tax Returns
A Taxable Person – Any person registered or obligated to register for tax purposes, who makes a supply of taxable Goods or Services or a deemed supply excluding Exempt supply.
The standard VAT return filing period will be on a quarterly basis. However, the authority may request certain type of businesses to file the VAT return on monthly basis to reduce the risk of tax evasion and improve the monitoring of compliance adherence by the business.
Return Filing Period
Applicability of VAT Return
Most of the businesses in UAE will be filing the VAT Returns on a quarterly basis
Only certain classes of businesses will be asked to file VAT Return on a monthly basis.
Also, in order to ensure the reduction of compliance burden on the businesses and administrative burden on the authority, the law is provisioned to allow a certain type of businesses with a longer VAT return filing period.
For large businesses, the tax return is required to be filed on monthly basis. Therefore, they have to file return before 28 of the next month.
Normally, Tax return has to be filed every quarter within 28 days from the end of the quarter.
A person whose registration has been cancelled must provide a final Tax Return for the last Tax Period for which he was registered.
Any incomplete return submitted to the Authority shall be treated as not having been accepted by it if it does not include the basic information determined by the Tax Authority.
Correction of errors made in previous return period can be carried out. The taxable person must disclose this error to the FTA within 30 days of becoming aware of this error and include in the Tax Return to be submitted immediately after noticing and correcting the error.
VAT Return Form: 201
The Tax Return is to be filed in Form VAT 201 which is available for use for every Registrant as soon as the Tax period comes to an end. For instance, if the first tax period of a Registrant is 1st January 2018 to 30th April 2018, the VAT 201 Form will be available for use from 1st May 2018 onwards.
Errors in calculation of payable tax of above AED 10,000 should be reported under the Voluntary Disclosure Scheme; however Errors in calculation of payable tax of not more than AED 10,000 can be corrected in the subsequent tax return.
Fields in VAT Return Form 201:
The registered businesses in UAE are required to file online VAT return. The VAT return form in UAE is expected to be at summary level. This means, the registered businesses are required to submit the consolidated details of supplies such as total sales, total purchases, output VAT, input VAT and tax payable.
Though the details are at consolidated level, the businesses are required to classify the supplies into the following categories:
- Standard rated
- Zero rate Supplies
- Exempt Supplies
- Reverse Charge Supplies
- Intra GCC Supplies
The VAT return filing in UAE is expected to be entirely online. This means, all the registered businesses in UAE are required to submit their VAT return statement by logging in on the FTA portal.
The FTA portal is designed to accept the returns only through online mode and offline capabilities to file VAT return through XML, EXCEL or any other utilities are currently not available. This implies that the taxpayer is required to manually provide the values of Sales, Purchase, Output VAT, Input VAT etc. in the appropriate boxes of VAT available in FTA portal.
Box-1 relates to Standard Rated Supplies which needs to be reported Emirate wise:
- For all businesses which are established in UAE the Standard Rated supplies should be reported based on the place of supply closely related to the place of the Fixed Establishment of the Registrant.
- For unregistered businesses the emirate wise reporting should be done based on the place where the supply was received by the Recipient.
There is an adjustment column for making adjustments in the form of deductions from the box 1 Standard Rated Supplies. There are only two items permitted to be shown under the adjustments column are:
- Bad Debts Tax Amount should be reported for each Emirate, where applicable,
- adjustment column can also be used by a seller of commercial property for adjusting the output tax on commercial property which is already paid by the buyer.
Items that are to be excluded from Box 1 are as follows:
- Sale of goods located within Designated Zones, which are not consumed within the Designated zones.
- Out of Scope supplies.
- Zero Rated supplies – exports, Zero rated educational services, Zero rated healthcare services.
Box-2 is for Value of tax refunds provided to tourists under the “tax refunds for tourists scheme”. Report under the ‘VAT Amount’ column the amount of VAT that has been refunded to the tourists. The registrant should use this box only if they are a retailer and provide tax refunds to tourists in the UAE under the “tax refunds for tourists scheme”. The amount reported in this box should always be a negative. This amount will reduce the total Output Tax Liability. If Registrant is not authorised to handle refunds for tourists, this box should remain with the Nil value already pre-populated.
Box 3 is meant for reporting the tax liability under the Reverse Charge Mechanism for goods that are imported without customs declaration. This box is also meant for reporting the liability under Reverse Charge Mechanism for import of services. Value in this box will be Net Value and the VAT Value of the Output Tax due on these supplies – if the Taxable person is entitled to recover the Input Tax against these imports then it will be shown under Box 10
Box 4 is meant for declaring the value of supplies of goods and services which are subject to VAT at 0% (Zero rated supplies). VAT on the supply is calculated as Nil and hence Net Value of Supply needs to be declared.
Box 5 is meant for reporting all exempt supplies. Only the Net Value of the supply is required to be declared in this box as there is no VAT on the supply
Box 6 shows the Net Value and Output Tax due on the goods which have been imported into the UAE. The figures in this box are pre-populated based on the customs declarations made using the Import Code which is linked to the registrant’s TRN. The Amount will include Customs Duty and Excise Tax paid on goods imported. Output Tax Amount will also be auto-populated in the “VAT Amount (AED)” column. Agent importing goods on behalf of non-registered persons should be responsible to pay tax – hence will be reflected under this box.
- Box 7 is used when the information included in Box 6 is incomplete or incorrect. Examples of adjustments which can be done in this box are:
- If the amount declared for VAT under Box 6 does not include Customs Duty and Excise Tax and hence is incorrect, then the adjustment can be made in Box 7.
- If goods imported are taken at 5% but it is actually Zero Rated then you can adjust in Box 7.
Box 8 will automatically calculate the totals of all the above boxes from box 1 to 7.
Box 9 is for entering all amounts subject to Standard Rate of VAT for which you would like to recover the Input Tax credit.
Box 10 allows you to recover any VAT which has been paid as output tax under reverse charge mechanism which was declared in Boxes 3, 6 and 7 of the VAT Return. Only recoverable portion should be shown in the Recoverable VAT Amount column.
Box 11 then automatically calculates the total of the values declared in Box 9 and 10.
Box 12 shows the total value of Output Tax that is due for the Tax Period which will be calculated as the sum of the VAT and Adjustments column in the Outputs Section.
Box 13 shows the total value of Input Tax that is recoverable for the Tax Period which will be calculated as the sum of the VAT and Adjustments column in the Inputs Section.
Box 14 shows the “Payable Tax for the period”. This will be the total due tax for the period less the total recoverable tax for the period and will indicate net payable or recoverable tax for the current Tax Period. If the figure in Box 12 is more than the figure in Box 13, the difference is the amount of VAT you must pay. If the figure in Box 12 is less than the figure in Box 13, then you will be eligible to request a refund for the net amount of recoverable tax. If you do not wish to request for a refund of the excess recoverable tax, your excess recoverable tax will be carried forward to subsequent tax periods and can be used to offset against payable tax and /or penalties, or you can apply for a refund later at any point of time.
Box 15 is for making request for refund. Option is available in the VAT Return to request for a refund of the excess recoverable tax. If “Yes” is selected, you will be required to complete the VAT refund application in Form VAT311 after submission of the VAT Return. If “No” is selected, your excess recoverable tax will be carried forward to subsequent Tax Periods and can be used to offset against payable tax and/or penalties.
Submit the Return: Review all the information entered on the form after completing the mandatory fields and confirming the declaration. Once you are certain that all the information is correct, click the “Submit” button at the bottom right hand corner of the screen. Upon submission you will receive an email to confirm submission.
All rights reserved. No part of this Article may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior permission, in writing, from the author.
Author of this article is CA Deepak Bharti who is member of ICAI. Currently he is working as partner in M/s N A V & Co. Chartered Accountants, handling the Corporate Compliance and Legal Department. He can be reached at firstname.lastname@example.org. Suggestions/comments are most welcome.
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