VAT Return Filing Services in UAE

VAT return filing is the process whereby VAT-registered businesses are required to submit their VAT liabilities to the Federal Tax Authority.

Businesses are required to submit the following during every tax filing period:

• Output VAT – VAT charged on taxable sales
• Input VAT – VAT paid on eligible business expenses

The VAT return is a summary of the above transactions and reflects whether the business owes tax to the government or is eligible for a refund.

VAT is calculated using the following formula:  VAT Payable = Output VAT – Input VAT

Note: Where output VAT is higher than input VAT, the business is required to pay the difference to the FTA. Where input VAT is higher, the business can carry forward the credit or claim a refund, depending on eligibility.

VAT returns in the United Arab Emirates are filed in compliance with the tax period determined by the Federal Tax Authority.

The majority of businesses are allocated a quarterly tax period, where VAT returns are filed on a three-monthly basis. Large-scale businesses or those that record a high volume of transactions may be required to file on a monthly basis.

Here are key VAT return compliance requirements:

• VAT returns must be filed within 28 days after the close of the tax period
• All VAT liabilities must be paid within the same timeframe
• Failure to file on time may result in administrative penalties and interest charges

A well-organized VAT return filing process helps businesses comply with these deadlines.

A VAT return is a document that outlines a brief summary of all the VAT-related activities carried out within the stipulated period. The VAT return form has various sections for reporting. Correct classification of transactions is necessary, as errors in reporting categories can lead to inaccurate VAT calculations or regulatory scrutiny.

The main sections of the VAT return form include:

• Standard-rated sales (5%) – Goods or services subject to the standard VAT rate
• Zero-rated supplies – Goods or services subject to 0% VAT
• Exempt supplies – Goods or services not subject to VAT
• Imports subject to reverse charge – Goods or services imported by the business, subject to VAT
• Recoverable input VAT – VAT on allowable business expenses
• Net VAT payable/refundable – The VAT amount payable or refundable for the stipulated period

Preparation of VAT returns requires accurate financial statements and compliance with VAT rules. However, some companies still face difficulties in the process of VAT return preparation. 

These challenges include:

• Inaccurate VAT coding in accounting software
• Inaccurate treatment of zero-rated and exempt supplies
• Inaccurate treatment of the reverse charge mechanism for imported services
• Claiming input VAT on non-recoverable expenses
• Inconsistencies between accounting statements and VAT returns

These differences may cause errors in VAT returns, thus, resulting in penalties, voluntary disclosures, or further reviews by the Federal Tax Authority.