Step-by-step Guide for Tax & Return Filing in UAE

The Value Added Tax was introduced in UAE in 2018 and since then businesses have to file VAT returns with Federal Tax Authority (FTA). While the VAT rates in UAE are straightforward, that is 5% standard rates and exemptions for specific sectors, there are companies that find Tax & Return Filing in UAE confusing. The whole process can be overwhelming, especially if you are a SME or startup. These confusions lead to errors or delays that can end up in penalties. This can impact your business, especially when you don’t understand the procedure.

This guide is a complete and detailed help on how to file your VAT returns in UAE while staying compliant.

1.       Start by understanding the VAT return requirements. The VAT registered business in UAE is required to file periodic VAT returns even when they don’t have taxable supplies or purchases. The standard tax period for any company is quarterly and monthly. In case of quarterly, the business should have an annual turnover below AED 150 million. For the monthly taxes, businesses should have an annual turnover above AED 150 million. There is an electronic portal for FTA where the returns are filed. This is also where the payments are made regularly to avoid penalties.

2.       You should collect and verify all the financial data for the particular tax period before you begin filing, according to VAT return filing services in Dubai. This will include the total taxable sales, including standard-rated, zero-rated and exempt supplies. The output VAT should be collected from customers while input VAT should be paid to the suppliers. You should also consider the imports that are included in VAT under the reverse charge mechanism. Lastly, include the adjustments, credit notes and bad debts as well. when you have a proper accounting system, this process is a lot more smoother and can reduce errors.

3.       Your next step is to login into the eservices portal for FTA. This is the digital process to file your returns. You should login to the portal using your registered username and password. Next, you should go to the VAT 201 form that is used to submit the VAT returns. In case you don’t have an account, you must first register with the FTA and obtain the Tax Registration Number. You can get help from the tax and return filing in UAE services for this purpose.

4.       You should then complete the VAT 201 return form that is divided into multiple sections. Here, you need to enter all the details regarding purchases, supplies and VAT obligations. The box 1 to 5 should contain details on output VAT. Enter the details of all the supplies from within and outside UAE. This should include zero-rated and exempt supplies as well. In the boxes 6-8, you should report the recoverable input tax from local purchases, imports and expenses. The last box that contains Net VAT due automatically calculates the different between output and input VAT. If the output is higher, you may need to pay the balance according to the VAT return filing services in Dubai.

Make sure to review the form before submitting. Make necessary payments against the VAT.