At the end of each tax period, VAT registered businesses or the ‘taxable people’ must submit a ‘VAT return’ to Federal Tax Authority (FTA). A VAT return summarizes the value of the supplies and purchases a taxable person has made during the tax period, and shows the taxable person’s VAT liability. Any company registered under VAT Law shall maintain its book of records for a minimum period of 5 years.
Maintaining VAT records is done for tracking up-to-date information regarding VAT filing and to avoid unnecessary tax payments. A VAT return summarizes the value of the supplies and purchases a taxable person has made during the tax period, and shows the taxable person’s VAT liability. The FTA portal is designed to accept the returns only through online mode as offline capabilities to file VAT return through XML, EXCEL or any other utility are currently not available. This implies that the taxpayer is required to manually provide the values of Sales, Purchase, Output VAT, Input-and Input VAT etc. in the appropriate boxes of the VAT return form available in FTA portal.
The VAT Return form is named as 'VAT 201' which the taxpayer needs to fill and submit in order to complete the VAT Return filing. The Form VAT 201 is broadly categorized into 7 sections as mentioned below:
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Taxable Person Details
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VAT Return Period
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VAT on sales and all other outputs
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VAT on expenses and all other inputs
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Net VAT Due
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Additional reporting requirements
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Declaration and Authorized Signatory
Each of these sections contain various boxes in which the taxpayer needs to furnish the details in order to complete the VAT Tax return filing.
What is VAT Return Filing and VAT Compliance?
In simple terms, VAT return filing states how much VAT is to be paid or reimbursed by the tax authorities. A VAT return is done quarterly and it helps the business to track the business VAT path. VAT is also charged for business entities involved in the business activities with other countries. While carrying out these activities it’s better to be VAT compliant to avoid any kind of penalty that becomes a hindrance in the way.
The Form VAT201 contains the following content in relation to Output and Input tax
Output Tax
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Tax liability on standard rated supplies (5%) and that to emirate wise
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Tax liability on goods purchased from outside the UAE (imports) through customs.
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Tax liability on services rendered from outside the UAE.
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Tax on products purchased outside the UAE on which no tax liability is created whatsoever.
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Tax refunds made available persons touring the country.
Input Tax
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Tax levied on standard rated expenses.
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Tax levied on standard rated purchase of goods.
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Tax levied on goods purchased outside the UAE.
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Tax levied on services rendered outside the UAE.
Any taxable person in the UAE can file its VAT return using the online portal made available on the website of the FTA. The person filing the tax return should first access the Form VAT201 by logging into the e-services of the FTA online portal by entering respective username/ email address and password. Our team of tax professionals would assist you in completing the entire form and in filing the return by the date specified by the FTA.
The tax return in the UAE provides information regarding the amount of tax due or refundable for a specific tax period. The taxable person is required to provide information about the output tax payable along with the input cover available against the output tax. If an entity’s output tax exceeds its input tax then in that case the entity is liable to pay the exceeding amount as tax to the authority. On the flip side, if the entity’s input tax exceeds its output tax then the exceeding amount in this case is to be refunded to the entity by the authority.