Value-added Tax (VAT) is imposed charges on the consumption of goods and services. Be it a new startup or an established business, filing for VAT return acts as a savior and also holds a good image in the eyes of the government. Today almost more than 180 countries have accepted the procedure and this got spread worldwide at a faster pace. the middle East countries, especially the UAE, which has been tirelessly working on setting itself as a business hub, has understood the importance of VAT filing.
What is the 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 additionally charged for business entities involved in business activities with other countries. while carrying out these activities it’s better to be VAT compliant to avoid any reasonable penalty.
How to Calculate VAT Due/Liability?
The taxpayer is accountable for calculating the VAT return during the filing process. it is calculated considering the following factors:
The total sales and purchases of your business in the relevant return period amount of VAT you owe for sales, the amount of VAT you can claim for the purchases made.
In the end, if you owe a lot of VAT than you need ready to claim, then you need to pay the difference. If the situation goes vice-versa, either ask for the refund of excess VAT or can carry forward the excess to the next return period.
How to File VAT return in UAE?
Businesses will file their VAT return online using the Federal Tax Authority (FTA) portal, where one would find the VAT 201 form. To access this form, the payer must log in to the FTA e-Services portal, and choose VAT>VAT 201- VAT return on the navigation menu. Here, one is required to fill in the data regarding the following:
Details of the taxable person at return period on sales and all other outputs at on expenses and all other input set VAT due to Any different reporting requirements Declaration and authorized signatory
Once the form is duly filled and submitted, the taxpayer would receive an e-mail from the FTA confirming the submission of the VAT return form. After submitting the return, the taxpayer has to pay the due tax, if any, through one of the various payment channels like E-dirham, exchange houses, online bank transfer, over-the-counter bank payment, etc.
VAT return form 201
VAT 201 stands for what needs to be made by the end of every tax period. It reflects the VAT that the vendor charged on supplies or details for which he is liable to declare output and input tax.
Sections under form VAT 201
The details required to be filled in VAT form 201 include the following:
Taxable Person’s Details
Initial details like Tax registration number (TRN) are needed to be mentioned. just in case if a tax agent is submitting the documents on behalf of the taxpayer, then the Tax Agent Approval number (TAAN) is required along with the tax agency name.
VAT return period
The VAT return period is important for any business as it sets a deadline for filing a return and also helps the entity to keep track of their filings.
VAT on Sales and all other Outputs
The details related to standard tax supplies need to be furnished according to the UAE level.
VAT on Expense and all other Inputs
Here the details regarding the purchases made need to be furnished at the side of the 5-hitter tax.
Net VAT Due
The VAT payable section mentions the tax that is because of the tax authority during the tax period whereas the VAT recoverable section states the total value of input tax that is recoverable for the tax amount.
Additional reporting requirements
This section is important for businesses who have applied for a profit margin scheme during the VAT period. It doesn’t have any financial impact.
Declaration and authorized signatory
The authorized signatures need to be inked on the documents before submitting them for VAT filing. The tax-payer should ensure the documents properly before submission. the option of saving the main points under draft and submitting it later is available.
Benefits of Filing VAT return
Many massive corporations are often reluctant to conduct business with companies that aren’t VAT-registered business image gets highlighted once registered under VAT law is easier to manage as compared to any other indirect tax
Thus, you’ll be able to see how important it has become for business entities to implement the VAT filing process and also to become VAT compliant while carrying out multi-national businesses. VAT filing protects your business as well as gives legal assurance and proof of your business existence and it holds an upper-hand in the arena of tax payments and avoids a financial loss. Are you trying to figure out how to initiate the process? Well, we have a solution for you. You have to just connect with our VAT Consultant in Dubai. They will help you with VAT Return filling.