In today's fast-paced business environment, VAT compliance isn’t just another checkbox—it’s a strategic element.

In UAE at the end of each tax period, VAT registered businesses or the ‘taxable persons’ must submit a ‘VAT return’ to Federal Tax Authority (FTA).

A VAT return summaries 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 liability of VAT is the difference between the output tax payable (VAT charged on supplies of goods and services) for a given tax period and the input tax (VAT incurred on purchases) recoverable for the same tax period.

Where the output tax exceeds the input tax amount, the difference must be paid to FTA. Where the input tax exceeds the output tax, a taxable person will have the excess input tax recovered; he will be entitled to set this off against subsequent payment due to FTA.

When are businesses required to file VAT return?

Taxable businesses must file VAT returns with FTA on a regular basis and usually within 28 days of the end of the ‘tax period’ as defined for each type of business. A ‘tax period’ is a specific period of time for which the payable tax shall be calculated and paid. The standard tax period is:

• quarterly for businesses with an annual turnover below AED150 million
• monthly for businesses with an annual turnover of AED150 million or more.

For example, for the tax period ending on June 30, the VAT return must be submitted by July 28.

How to file VAT return?

You must file for tax return electronically through the FTA portal: eservices.tax.gov.ae. Before filing the VAT return form on the portal, make sure you have met all tax returns requirements.

Best Practices for VAT Return Filing

• Maintain Comprehensive Records: Retain all invoices and receipts related to business income and expenses to support your VAT filings.
• Utilize VAT-Compliant Accounting Software: Automating the VAT filing process helps minimize errors and ensures adherence to compliance standards, eg Zoho books is an FTA accredited software
• Perform Regular Reconciliations: Routinely reconciling your VAT accounts can help identify and resolve discrepancies before submitting returns.

Penalties for Incorrect VAT Filing

Organizations find VAT return filing increasingly time‑consuming and error-prone.

Submitting inaccurate or late VAT returns may result in penalties of up to AED 2,000. Additionally, failing to pay VAT on time can lead to further penalties, including interest charges on overdue payments.

By staying organized and leveraging the right tools, businesses can streamline the VAT return process and avoid unnecessary penalties.

Please reach out for accurate, timely VAT filings.