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Q&As to your First VAT Return

Posted on 05-May-2018 09:23 PM
Q&As to your First VAT Return

As you prepare for your first VAT Return, you may have some persisting questions that may be creating a little uncertainty. From our research and discussions with clients the questions below are the most common. Our Q&As may shed further insight and help you with your first submission.

  1. Do you need to submit a return?

Yes. As a Tax Registered business, you are obliged to submit a VAT return. This is a mandatory requirement, failure to submit by the date specified will lead to an automatic fine and interest on VAT payable.

Late filing of VAT return attracts penalty of AED 1,000 for the first time of occurrence of a delay. The penalty would be increased for subsequent non-compliance of filing of VAT Return.

2. When do you need to submit our VAT return?

The dates for your return is detailed on your VAT certificate. The period for which you need to submit your return is also specified. Usually you will need to submit quarterly or monthly depending on your turnover.

VAT Return Filing must be done by not later than 28th day of the month following the Tax period or by such other date as requested by FTA. For example; if your first VAT return period is January 2018 to March 2018, your VAT return due date will be 28th April 2018. Where a payment is due, it should also be paid by the same deadline. Where the due date falls on a weekend or a national holiday, the deadline is extended to the first business day thereafter.

3. What forms do you need to complete for filing VAT return?

You must complete the VAT 201 form accessed on line through the E-Services login. There is a set format for the return and you are required to populate every cell.

4. How do you prepare your VAT return?

You must record all your sales and all your purchases for this period with the associated VAT collected and the VAT on purchases you wish to recover (subject to the Regulations). The return requires you to provide your sales, purchases and VAT amounts by specific transaction types (exports/reverse charge etc).

Some details are prepopulated such as details of the Taxable Person, current VAT Return Period, Tax year end, VAT/Tax Period reference number and VAT Return submission due date.

General Comments

For VAT Return Filing, the following should be taken care of;

All amount should be in United Arab Emirates Dirhams (AED).

All amounts should be rounded off to the nearest fills.

All mandatory fields should be completed.

Use “0” if there are no amounts to be declared.

Sales/Output VAT

You are required to provide Emirates based details of taxable supplies i.e. based on the fixed establishment (head office/branch/warehouse etc.) from where supplies are happening.

Details to be summarized under Taxable Supplies includes the following;

Supply of goods and services (net of discount).

Sale of commercial Property

Advances received.

Deposits received other than those which are refundable (e.g- security deposit)

Goods sold under Profit Margin Scheme.

Supplies of Goods within Designated Zone which are consumed within Designated Zone

Supplies made by a non-resident who had to register in UAE since the recipient of goods or services is not registered in UAE (and hence Reverse Charge Mechanism does not apply).

Credit notes issued (to be deducted from total supplies).

Errors noted for the Previous Tax periods can be deducted provided the error does not result in the Output Tax being increased/decreased by an amount more than AED 10,000/.

Additional information relating to supply to be declared in the VAT Return Filing are the Zero-rated supplies and exempted supplies.

Summary values of supplies of goods and services under Reverse Charge Mechanism to be declared separately. However, value of goods imported into UAE will be auto-populated to the extend it was declared under the Taxable Person’s customs registration number.

Adjustments can be made to the value of imported goods that is auto-populated in case of omission or mistake in the value when compared with the amounts reported in the customs and import declaration.

Further, any import of goods which are not subject to standard rate of VAT in the UAE at 5% can also be adjusted as by default all the imports are assumed to be subject to 5% VAT rate.

Purchases Input VAT

You are entitled to recover VAT on purchased if you can satisfy the following criteria:

The goods or services acquired are used or intended to be used for making taxable supplies.

VAT input tax refund can be claimed only on the amount paid or intended to be paid before the expiration of 6 months after the agreed date for the payment of the supply.

You must meet these conditions to claim VAT refunds, or you may run into penalties in the event of an FTA audit. You must ensure that only purchases attributable to the business and adhering to the policies and rules set out in the Executive Regulations should be submitted into your input VAT calculations.

The details of standard rated expenses to be declared in the VAT Return includes the following;

Goods or services purchased (net of discount).

Goods or services purchased before Tax Registration for which input Tax can be claimed.

Credit notes raised by the supplier.

Errors noted for the Previous Tax periods can be deducted provided the error does not result in the Output Tax being increased/decreased by an amount more than AED 10,000/.

A number of factors must be addressed for businesses from the checking of compliant invoices, calculating the right input VAT values, adjusting for changes under the items such as the capital assets scheme to the VAT apportioning for mixed use purchases.

Ideally your account payable team require an understanding of the specific rules and implementing internal process, escalation review for clarifications and monthly or quarterly reporting. This implies regular training and procedures in your business to manage the end to end process.

In addition, the FTA can request and check any claim 5 years from your submission. Therefore your business will also need to manage the most efficient means to archive and trace transactions to substantiate your VAT claim.

5. What is the process of filing the Return?

Your return is an on line process accessed from your FTA login. The VAT201 form is accessed from the VAT tab once you login through the E-Services page.

6. What additional documents do you need to support the VAT calculation and return?

The return is based on a self-declaration principle, that is you are obliged to ensure all of your return is accurate and truthful. No further documentation is necessary including invoices to be submitted. However, the obligation to keep all transactional documents including invoices and supporting documentation to justify your working is to be retained for any audit by the FTA.

7. How do you pay VAT to Tax Authority?

VAT is payable online through bank transfer or bank using your GIBAN reference, credit card (subject to a 3% processing fee) and e-Dirham account. Your GIBAN is available on your FTA portal in the Dashboard section.

Bank payments require 3 working days to ensure it reaches the FTA account and you can check receipt online through the E-Services login in the 'My Payment' tab.

8. How do you get a VAT refund?

After filling the details in the VAT Return Form, the net amount payable will be automatically calculated. In case where the payable value is negative, you can will have two options – To get a refund or to carry forward the amount to the next Tax period.

However, the FTA may check your return, sales/purchase invoices and the workings to process the return.

9. How do you know the payment is made?

Payments received can be checked in the My Payments tab in the E-Services login. You will also receive payment confirmation if you pay by credit card , e-Dirham account.

10. What may be required from the FTA after the return is submitted?

The FTA may request to assess your invoices and workings to validate your submission. They can request this for up to 5 years from your return date. Therefore, you will need to be fully aware of your return and how it is calculated, store all records and ensure nothing is lost.


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