Value Added Tax (VAT) is a widespread tax imposed on the sale of goods and services. In 2018, the UAE implemented VAT, requiring businesses to comply with its regulations. Under the VAT system, consumers pay a tax based on the value of the goods and services they purchase. The higher the price, the greater the VAT payment. Businesses with either taxable sales or taxable expenses of AED 187,500 and above can register for VAT voluntarily and if their taxable sales or expenses exceed AED 375,00 then registration is mandatory for them.
Regarding Value Added Tax (VAT) return filings, businesses in the United Arab Emirates (UAE) often grapple with complex regulations and the risk of penalties for non-compliance. However, there is good news – professional VAT return filing services in UAE are readily available to alleviate this burden. With their expertise and support, businesses can quickly and confidently navigate the intricacies of VAT return filings. This blog will explore the benefits of top-notch VAT return filing solutions provided by reliable and trusted consultants. So, let’s delve into the world of professional VAT return filing assistance and discover how it can revolutionize your approach to VAT compliance in the UAE.
VAT return filing in UAE
VAT return filing in the UAE is a straightforward procedure that entails submitting a form with details pertaining to VAT-related sales and expenses incurred by a business or entity during a specific tax period. Filing VAT returns is crucial for businesses as it provides a comprehensive overview of the amount payable and facilitates initiating VAT refunds or reclaims. By completing VAT returns accurately and promptly, businesses gain clarity on their VAT obligations and ensure compliance with the tax regulations in the UAE.
Below are the step-by-step procedures for VAT filing in the UAE:
Opening an account with the Federal Tax Authority (FTA):
A business entity must register for VAT and create an account with the FTA. Hiring a tax agent is recommended to ensure accurate information submission. The taxable person should provide the FTA with accurate information of their business & provide documents such as Trade License, Memorandum of Association, Passports & Emirates ID of all managers, shareholders and authorized signatories etc. The tax period for filing a VAT return is decided by FTA. Once a taxable person submits their VAT Registration application to FTA, they have to wait for FTA’s decision on approval. Once the approval is received, FTA will provide the taxable person with their relevant tax period. After that, the taxable person will submit their VAT returns according to those tax periods. Once application is submitted & approved, FTA provides the taxable person with their relevant tax return period.
VAT return filing process
Navigating the VAT return filing process in Dubai requires a systematic approach to ensure compliance with the Federal Tax Authority (FTA) regulations. With the convenience of the FTA’s online portal, businesses can initiate the VAT return filing process seamlessly.
This comprehensive step-by-step guide will walk you through the process:
1. log in to the FTA Service Portal
The next step involves logging in to the FTA’s service portal. Logging in is a straightforward process. Access your account using your unique Tax Identification Number (TIN) and password. You can successfully log in to the portal and proceed with the VAT return filing process by entering your credentials.
2. Select the Return Filing Option
Upon accessing the online portal, you will be presented with various choices. Locate and click on the “Return Filing” option to proceed with VAT return filing. This option is typically found within the e-services section of the portal. By selecting this option, you will be guided to the necessary tools and resources for completing your VAT return filing process.
3. Initiate by Accessing the Online Portal
The initial step in Dubai’s VAT return filing process is to visit the FTA’s online portal at eservices.tax.gov.ae. The online platform is the primary and only method to approach the FTA for VAT return filing in Dubai. Utilizing the online portal is essential, as offline methods are not applicable. Therefore, accessing the online portal becomes the exclusive means to proceed with the VAT return filing application.
4. Complete the VAT Form
Once logged in, complete the VAT form by providing all the requested details. Typically, the form will require information about your business, transactions, tax liability, and any applicable penalties. While submitting the VAT Return, FTA doesn’t ask for any additional supporting documents, however, when submitted an application for VAT Refund, FTA will ask for supporting documents and transaction wise details of all figures entered in the VAT return so it’s important that there are documents for all the figures entered in the VAT Return. Additionally, FTA may perform an audit at any time and ask for documents and additional details regarding anything so it’s important to make sure that the VAT Return filing is being done accurately.
The form will include
• fields for entering net amounts excluding VAT
• VAT amount
Take care to fill in all the required inputs by the provided guidelines.
Accounting for VAT sales, expenses, and inputs:
The business must submit mandatory information regarding VAT sales, expenses, and inputs made throughout the financial year. It includes exempt and zero-rated supplies and expenses incurred at the current VAT rate of 5%.
Calculating the net VAT due to the FTA:
The business must calculate the net VAT due once the VAT sales, expenses, and other inputs are submitted. The difference must be paid to the FTA if the VAT amount due is higher than the recoverable amount. Conversely, if the recoverable amount exceeds the amount due, it can be refunded to the business through VAT refund or reclaim.
5. Submitting the declaration
Before submitting the form, please carefully review all the provided information to ensure its accuracy and completeness. It is crucial to avoid any mistakes or omissions in the form. Take the time to fill in all the required fields without leaving any spaces blank. Once you are confident that the form is accurate and complete, submit it. It is essential to exercise caution during this step as there is no room for errors in such application forms. By being meticulous and thorough, you can minimize the risk of mistakes. Finally, click the submit button to submit your application form for VAT return filing formally.
6. Final Payment and Filing Deadline
Within the online portal, you will find a tab labeled “My Payments.” Use this option to make the payment for your final VAT return. It is essential to promptly fulfill the payment requirement to ensure compliance with the VAT regulations. Additionally, pay close attention to the filing deadline for your application. It is crucial to know the last date for submitting the VAT return. It prevents potential issues where you may miss the deadline after applying. By staying vigilant and proactive, you can safeguard against any last-minute complications. Always prioritize adhering to the filing deadline to remain on the safe side of VAT compliance.
Administrative Penalties for VAT in the UAE
Businesses must be cautious and ensure accurate VAT return filing in the UAE. Incorrect information or misleading figures can result in significant fines and penalties. By following these steps diligently, businesses can fulfill their VAT obligations and maintain compliance with the tax regulations in the UAE.
Actions
1) If the designated legal representative of a taxable person fails to meet the tax return submission deadline, the penalties imposed will be borne by the personal funds of the legal representative.
2) The Registrant’s submission of an improper Tax Return.
Penalties
For the initial violation, a penalty of 1,000 AED will be levied. If the violation is repeated within 2 years, the penalty amount will increase to 2,000 AED.
1. A fixed penalty of 1,000 AED will be applied for the first instance of non-compliance.
2. In the case of repeated non-compliance, a penalty of 2,000 AED will be levied.
3. However, as an exception to the first penalty clause, if an incorrect Tax Return results in a Tax difference that is less than the fixed penalty mentioned in the first clause, a penalty equivalent to the Tax difference, with a minimum of 500 AED, will be imposed.
4. Individuals who rectify their Tax Return before the payment due date will be exempted from the penalties in the first and second clauses.
Can Taxable Persons submit a Reconsideration request for VAT Penalties?
Taxable persons can submit a reconsideration request regarding a VAT penalty imposed on them. If a taxable person disagrees with the penalty decision, they can formally request reconsideration to the relevant authority within 20 working days of receiving the penalty decision. The authority can either fully or partially grant the reconsideration request. To gain a better understanding of VAT penalties in the UAE and the process of requesting reconsideration, it is advisable to consult a reputable VAT
consultancy in Dubai.
Waiving or Reducing Administrative Penalties
The Federal Tax Authority can reduce or waive an imposed administrative penalty in certain circumstances. It may occur if the taxable person presents a valid justification before the authority or provides evidence supporting their defense against the violation that led to the penalty imposition. The application for reduction or waiver must be submitted to the authority within ten working days after the relevant cause has expired, following the procedure specified by the authority. It is also essential that the applicant has yet to receive any administrative penalties in the two years prior and can provide evidence of rectifying the violation.
Engage the Services of Expert Tax Consultants in the UAE
To ensure compliance with VAT regulations and mitigate the risk of penalties, it is highly recommended to seek the assistance of top tax consultants in the UAE. By consulting with experts in the field, you can navigate the complexities of VAT compliance, understand the implications of penalties, and receive guidance on avoiding non-compliance. Contact us today for professional assistance and support in managing your VAT-related obligations.
Conclusion
Maintaining VAT compliance and avoiding penalties is of utmost importance for businesses in the UAE. By availing of top-notch VAT return filing services, businesses can streamline their VAT compliance process and ensure accurate and timely submissions. By adhering to the step-by-step procedures for VAT filing, businesses can minimize the risk of penalties and maintain compliance with the Federal Tax Authority (FTA). Furthermore, taxable persons have the right to request reconsideration in case of penalties, and the FTA may consider reducing or waiving penalties under certain circumstances. To simplify the complexities of VAT compliance and mitigate risks, it is highly recommended to engage the services of expert tax consultants in the UAE. By doing so, businesses can ensure they stay compliant with VAT regulations, reduce the chances of penalties, and confidently focus on their core operations.
