VAT Return Filing in the UAE – Simply Solved

Filing VAT returns under the UAE VAT law can be a straightforward process if approached systematically. This guide breaks down the procedure into clear steps, explains key concepts, and includes examples to help businesses comply with the VAT regulations effectively.

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1. Logging into the FTA Portal

To begin, VAT returns must be filed online through the Federal Tax Authority (FTA) portal. Here's how to access the system:

1. Visit the FTA Website: Go to the official FTA website.
2. Log In: Use the email ID and password associated with your account to log in.
3. Access the Dashboard: After logging in, you will be directed to your dashboard. This page displays:
   • TRN (Tax Registration Number)
   • Business information such as name and address
   • Tax period (monthly or quarterly)
   • VAT return due dates

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2. Navigating to VAT 201 Form

Once logged in, follow these steps to access the VAT return form:

• Go to VAT Returns Section: Click on "VAT 201" under the VAT returns menu.
• Select VAT 201-New VAT Return: This opens a detailed form pre-populated with your business information. Key details include:
  • Taxable person’s name in Arabic and English
  • Address
  • VAT return period and due date
  • Tax year-end and period reference number

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3. Understanding the VAT 201 Form

The VAT 201 form is divided into sections for:

• Output Liability: Taxes due on sales and supplies
• Input Credit: Taxes paid on purchases and imports
• Net VAT Payable or Refundable: The difference between output liability and input credit

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4. Recording Transactions in VAT Returns

Sales Transactions

Let’s look at how to record sales transactions in the VAT return:

• Example:
  • Sales from Dubai: AED 3 million (Tax: AED 150,000)
  • Sales from Sharjah: AED 1.1 million (Tax: AED 55,000)
  • Sales from Abu Dhabi: AED 2 million (Tax: AED 100,000)

For VAT filing, record sales under the emirate where the transaction originated, regardless of the customer’s location.

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Sales Returns

When goods are returned, issue a credit note and adjust the VAT accordingly.

• Example:
  • A customer returned AED 100,000 worth of goods from the Dubai shop.
  • Original sales amount: AED 3 million
  • Adjusted sales amount: AED 2.9 million
  • VAT reduction: AED 5,000

Record the credit note details under the output liability section.

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Export Transactions

Exports are generally zero-rated under UAE VAT law.

• Example:
  • Goods worth AED 2 million were exported to India.
  • VAT on exports: AED 0

Record exports under the zero-rated supply section of the VAT 201 form.

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Import Transactions

Imports are subject to the reverse charge mechanism, which requires businesses to record VAT liability on imported goods and services.

• Example of Goods Import:
  • CIF Value: AED 1 million
  • Customs Duty (5%): AED 50,000
  • VAT (5% of AED 1.05 million): AED 52,500

The import value and VAT liability will be auto-populated in the VAT 201 form. Input credit for the VAT amount can also be claimed.

• Example of Services Import:
  • Import Value: AED 1 million
  • VAT (5%): AED 50,000

Ensure accurate journal entries for such transactions to maintain compliance.

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5. Filing the VAT Return

After entering all transactions, review the following:

• Verify Input Credit Eligibility: Check whether the claimed input credit complies with VAT laws.
• Double-Check All Sections: Ensure all sales, purchases, imports, and exports are correctly recorded.
• Submit the Return: Once satisfied with the entries, submit the VAT return.

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6. Key Compliance Tips

• Understand Reverse Charge Mechanism: For imports, account for VAT liability and claim input credit appropriately.
• Issue Credit Notes for Returns: Proper documentation ensures accurate adjustments in VAT liability.
• Seek Professional Guidance: Complex transactions may require expert advice. VAT consultants like Simply Solved can assist in ensuring compliance and accuracy.

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Conclusion

Filing VAT returns in the UAE requires careful attention to detail and strict adherence to VAT laws. By following this guide, businesses can ensure compliance, avoid penalties, and streamline their VAT return process. If needed, consult with professional tax agents to handle complex scenarios efficiently.