A tax return is a document through which a tax registrant submits the details of his provides and purchases to the Federal Tax Authority (FTA) in the UAE.
VAT return filing in UAE depends on the tax periods assigned to your business by FTA upon VAT Registration. FTA, throughout the approval stages of VAT registration, determines the tax periods for registrants which can be monthly or quarterly as the authority may consider fit.
VAT return Filing in UAE is totally an online method through which a tax registrant can present the value of their sales and purchases and remit the tax due.
VAT return Filing in UAE doesn’t need submission of documents like tax invoices, tax credit notes at the time of return filing. The registrant is accountable to keep up all the documents related to his business and need to furnish it as and when sought by FTA.
Importance of VAT return Filing in the UAE
As a VAT registration in UAE, it is the responsibility of a business to report the details of its provides to the authority. comparing to the other tax regimes, VAT return filing in the UAE is relatively an easy method provided you understand the law completely.
As it is construed as an uncomplicated method, we have seen a lot of companies taking it gently and end up paying hefty penalties. Therefore, it is Mandatory that you file your VAT return properly and on time.
Penalties related to VAT return filing in the UAE
If a taxable person fails to file his return on or before the day of the month, he will incur a non-filing penalty of 1,000 for the first time. 2,000 in case of repetition.
If a taxable person fails to remit his dues on or before the day of the month, he will incur a non-payment penalty as follows:
» 2 of the unpaid tax is due like a shot.
» 4 -dimensional is due on the seventh day following the deadline for payment.
» 1 chronicle daily penalty is imposed charges on any amount that’s still unpaid one month after the due date for payment, up to a maximum of 300th.
These VAT penalties will be computed and charged to your Federal Tax Authority account from the date of default. Such VAT penalties can result in huge expenses to a business which can be avoided if proper attention is given to tax return filing.
Some of the common errors businesses create whereas VAT returns Filing.
It is very crucial for a business to know the layout and reasoning for each column in a VAT return. only by a proper understanding of the law, one can understand the intended use of a specific column in a tax return.
The most common errors we have noted are as follows:
- Non-maintenance of proper records
- Wrong emirate-wise reporting
- Improper adjustment of bad debts
- Wrong usage of ‘Adjustment’ column just in case of imports
- Incorrect input claims as well as personal expenses and entertainment expenses.
- Improper adjustment of taxes in wrong tax periods
- The wrong usage of Refund and VDF Forms
- Non-disclosure of import of service
A business has to be extremely careful in assessing its capability to address these problems because it may lead to non-compliance
