The first UAE VAT return, which companies must file for which the monthly VAT return is important, is due on February 28, 2018. Businesses must use the Federal Tax Authority (FTA) portal to submit their VAT returns online. If no offline filing options are available using XML, EXCEL, or any other software; the FTA portal accepts online VAT return submissions. The implication is that the taxpayer must manually enter the figures for Sales, Purchases, Output VAT, Input VAT, etc. in the appropriate areas on the VAT return form that is available on the FTA portal.
The taxpayer must fill out and submit the “VAT 201” VAT Return form to complete the filing of the VAT Return. The following 7 sections make up most of Form VAT 201:
- Taxpayer Information
- VAT Return Period
- VAT on sales and all other outputs
- VAT on expenses and all other inputs
- Due Net VAT
- Additional requirements for reporting
- Declaration and Authorized Signature
Each of these parts has several boxes where the taxpayer must enter information to finish filing the VAT tax return. Below is the discussion of components and required information on applicable boxes on VAT Return Form 201.
UAE VAT Return Filing Process – VAT Return Form 201
The taxpayer must enter their registered username and password to access the FTA e-Services portal to view the VAT Return Form 201. To start the VAT return filing process, choose “VAT” from the Navigation menu, then “VAT 201- VAT Return,” -> “VAT 201-New VAT Return.“
Finally, clicking ‘VAT 201- New VAT Return’ opens sections of the form as shown in the image. Let’s go over the step-by-step process for VAT tax return submission with the required section details.
Taxpayer Details
The space above will include The “TRN” or “Tax Registration Number” of the taxpayer along with their name and address. These details will automatically fill in.
When the VAT Return process starts and a tax agent submits the VAT return on behalf of a taxpayer, it automatically fills the TAAN (Tax Agent Approval Number) and accompanying TAN (Tax Agency Number), as well as the names of the Tax Agent and the Tax Agency.
VAT Return Period
The details in the previous section, such as the VAT return period, the Tax Year end, the reference number for the VAT return period, and the VAT return due date, will be filled in automatically.
Tax year-end is crucial for businesses unable to recover all of the input VAT and must adjust input tax apportionment. Such an adjustment can only be made on the first return following the end of the tax year. The VAT return period reference number identifies the VAT return period that you will be completing over that tax year.
If the VAT return period reference is 1, the affected enterprises must include their input tax apportionment annual adjustment in that VAT return. Currently, there is no need for concern on the part of businesses as this will only take effect after the first year of filing a VAT return, or from January 1, 2019, onwards.
VAT on sales and all other outputs
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You must include information about taxable supplies with a standard rate taxable supplies at the Emirates level, with zero rate supplies, taxable and exempt supplies, that are subject to the reverse charge mechanism, etc. in the above section.
VAT on Expenses and All other Inputs
You must include purchases or expense details for which you have already paid VAT at the regular rate of 5% in the above section and supplies open to reverse charge basis along with the applicable recoverable input tax.
Net VAT Due
This section lists the VAT payments you made during the VAT return period. Box number 12 displays the total amount of production tax due for the tax period: Total Amount of Tax Due during the Period. The information supplied in Sales and all other outputs determines the above computation. This is the Sum of output VAT and adjustment in sales and other outputs.
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The total amount of recoverable input tax for the tax period is shown in box number 13, “Total Value of Recoverable Tax for Period.” The information supplied in the section on VAT expenses and any other inputs will be used to calculate this. Box number 14 displays the payable tax for the period. The difference between the total amount of taxes recovered and the total amount of taxes payable for the specified time is shown by this number. The outcome will be either net VAT payable or reclaimed tax.
If the amount in Box 12 exceeds the amount in Box 13, you must pay the difference as VAT. If the sum in Box 12 is less than the sum in Box 13, you may request a refund for the net amount of recoverable tax or carry it forward to the subsequent VAT return period.
Additional Reporting Requirement
Companies using Profit Margin Scheme provisions are subject to this section. Otherwise, you can select “No” and move on to the part after that. There is no financial impact on your VAT return from this additional reporting obligation.
Declaration and Authorized Signature
Fill out the authorized signatory info and check the declaration box to submit the VAT Return. Additionally, the taxpayer has the choice to draft the details and submit them later.
The taxpayer must take great care to ensure that all the information is accurate before submitting the VAT Return. Only then should the taxpayer click the submit button. The taxpayer receives a confirmation email from FTA after successful VAT return filing.
Final Thoughts
The summary level details, including the totals for sales, purchases, expenses, output VAT, and input VAT, are necessary for the UAE VAT return submission. However, it is more crucial that the information should be as per the Federal Tax Authority’s (FTA) standard. If you look closely, you’ll see that the detailing in certain boxes goes beyond simple purchase or sale consolidation. Instead, it calls for a declaration of specifics or sub-level detailing based on eligibility. For instance, standard-rated sales are necessary at the Emirates level. The taxpayer provides info on eligible expenses and purchases for input VAT recovery.
To prepare a correct VAT Return in the required format, businesses must have the right tax accounting software. Consequently, it will not only help them account for their VAT transactions but also triangulate your company data. Businesses may quickly generate a valid VAT return with the right tax accounting software. More significantly, they can avoid paying costly penalties ranging from AED 1,000 to 3,000 for inaccurate or incomplete VAT returns.
Tax accounting software will be crucial for firms in determining their success in the area of compliance adherence.
In short, businesses must carefully consider the software that will facilitate a smooth transition to a new VAT system. It should also make accounting for VAT easy, and make submitting returns simple.