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 annual taxable supplies or expenses above AED 187,500 can register for VAT voluntarily. Mandatory registration is required if taxable supplies exceed AED 375,000.
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.
In a hurry to file your UAE VAT return and stay compliant? Follow these steps:
- Register with FTA: Open an account for VAT filing.
- Log into Portal: Access eservices.tax.gov.ae with TIN.
- Select Filing Option: Choose “Return Filing” in e-services.
- Complete VAT Form: Enter sales, expenses, and 5% VAT details.
- Calculate Net VAT: Determine amount due or refundable.
- Submit Form: Review and submit accurate details online.
- Pay on Time: Meet deadlines to avoid AED 1,000–2,000 fines.
Read on to cover 3 important tips to ensure VAT compliance and avoid penalties in 2025!
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. The FTA assigns monthly filing for businesses with turnover above AED 150 million, quarterly for others.
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
going through 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.
- Visit the FTA portal (eservices.tax.gov.ae).
- Log in with your TIN and password.
- Fill the VAT form with sales, purchases, and tax owed.
- Review and submit the form.
- Pay any tax due by the deadline.
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.
| Violation | Penalty (AED) |
|---|---|
| Late VAT return filing | 1,000 (first), 2,000 (repeat) |
| Incorrect return (tax difference) | Tax difference, min. 500 |
| Failure to keep records | 3,000 |
Can Taxable Persons submit a Reconsideration request for VAT Penalties?
Submit a reconsideration request within 40 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.
Quick FAQs
How often do I file VAT returns?
Monthly if your turnover exceeds AED 150 million, quarterly otherwise.
What’s the VAT rate in the UAE?
5% on taxable supplies, with exemptions for zero-rated or exempt goods.
Can I get a VAT refund?
Yes, if recoverable VAT exceeds tax owed, but you’ll need supporting documents.
