It has been more than a month since the new VAT TAX regime was introduced in the UAE and Saudi Arabia. With time other members of the GCC council will follow suit and join the league.
VAT Deadline for Tax Authority
UAE has now completed one month under the new tax regime. Hence all registered businesses have been notified by the UAE’s Federal Tax Authority (FTA) to file their first value-added tax returns positively by the end of current month i.e February 28. Payments can be made via the e-Dirham system and returns must be submitted on the FTA website.
Let’s try to look at the ins and outs of the tax return filing laws and procedure in this new VAT Tax regime.
Who is Taxable?
The minimum tax slab for businesses selling Goods or Services in the UAE is Dh375000. Business owners/firms must file their VAT returns and accordingly pay their dues within a set timeframe otherwise they will face penalties. All tax related documents must be updated along with the tax records. Records of all supplies and imports, as well as goods and services, must be up to date.
The FTA must receive the returns no later than 28 days after the end of the tax period. The minimum capital punishment for those failing to do so is Dhs500 ($136). The maximum amount is triple the value of the tax on the transaction. A first incorrect tax filing will result in a fine of Dhs3,000 ($817). Each following error will then attract a Dhs5,000 ($1,361) fine.
Period of Tax Return
Businesses in UAE need to file VAT TAX returns either on monthly or quarterly basis depending on their annual revenue. However, for some companies, the FTA has extended the tax return period to three months.
In response to the requests from various businesses, the FTA UAE, for now, has extended the first tax period to four/five months. However, the extension cannot be used by those companies whose first tax period was the opening quarter of the last year ending in March.
Following are some of the important things you must include in your VAT returns.
- The value of expenses incurred in the tax period.
- The value of any reverse-charged supplies received in the tax period.
- The value of standard-rated supplies made in the tax period and the output tax charged.
- The value of zero-rated supplies made in the tax period.
- The value of exempt supplies made in the tax period.
- The total amount of tax due and recoverable input tax for the tax period.
- The payable tax (or repayable) for the tax period.
The UAE VAT returns will be filed on the official website of the FTA by those businesses who are already registered on the portal.