According to the UAE VAT, the first VAT return will expire on February 28, 2018 and will be submitted by the company that applies the monthly VAT return. Companies must use the Federal Tax Agency (FTA) portal to submit their VAT returns online. The FTA portal is designed to only accept returns in online mode, because it is currently not possible to use the offline function through XML, EXCEL or any other utility to make file VAT returns. This means that taxpayers are required to manually provide sales, purchases, output VAT, input and input VAT equivalents in the appropriate boxes of the VAT returns available in the FTA portal.
The VAT return is called “VAT 201”, and taxpayers need to fill in and submit this form to complete the VAT return. The VAT Form 201 is roughly divided into the following seven parts:
VAT refund period
VAT on sales and all other output
VAT on fees and all other inputs
Net VAT payable
Additional reporting requirements
Declaration and authorized signatory
Each section contains different boxes where the taxpayer needs to provide detailed information in order to complete the VAT tax return. The above sections and the detailed information that needs to be provided in the relevant boxes of the VAT return 201 are discussed below:
UAE VAT Return Filling Process-VAT Return 201
To access the VAT return 201, the taxpayer should log in to the FTA electronic service portal with your registered user name and password. In the “Form Navigation” menu, select “VAT” -> “VAT 201-Value Added Tax Refund” -> click on “VAT 201-New Value Added Tax Refund” to start the VAT refund declaration process.
As shown in the figure above, after clicking “VAT 201-New VAT Refund”, the various parts of the VAT refund form will open. Let’s discuss the step-by-step process involved in submitting a VAT return and the information requested in the following sections.
1. Taxpayer details
In the previous section, detailed information such as the taxpayer’s “TRN” or “tax registration number” will be captured, as well as its name and address. These details will be filled in automatically.
If a tax agent submits a VAT return on behalf of a taxpayer, the TAAN (Tax Agent Approval Number) and related TAN (Tax Agent Number) details and the names of the tax agent and tax agent will be filled in the VAT return table.
2. VAT refund period
The detailed information in the above section, such as the VAT refund period you are currently declaring, the end of the tax year, the VAT refund period reference number and the VAT refund due date, will be filled in automatically.
The end of the tax year is very important for companies that cannot recover all input VAT and need to implement annual adjustments to input tax allocation. Such adjustments are only allowed in the first return after the end of the tax year. The VAT refund period reference number indicates the VAT refund period you will complete in that tax year.
If the value-added tax return period is referenced as 1, those affected enterprises should include the annual adjustment of input tax distribution in the value-added tax return. Enterprises do not need to worry now, because this applies after the first year of the VAT refund, that is, from January 1, 2019.
3. VAT on sales and all other output
In the above section, you need to provide detailed information about Emirates-class standard taxable items, zero-rated items, duty-free items, and items subject to reverse charging mechanism.
4. Fees and all other VAT entered
In the above section, you need to provide detailed information on purchases or expenses that have been paid VAT at the standard tax rate of 5%, as well as supply based on refundable expenses and eligible recoverable input tax.
5. Net VAT payable
This section indicates the VAT you should pay during the VAT refund period. Box 12: The total tax payable during the period represents the total output tax payable during the tax period. This will be calculated based on the information declared in “Sales” and all other outputs. This will be the sum of the “Output VAT” and “Adjustment” columns in “Sales” and all other outputs.
Similarly, Box 13: The total amount of tax recoverable during the period represents the total amount of input tax recoverable during the tax period. This will be calculated based on the VAT fee and the details provided in all other entries. Box 14 indicates the tax payable during the period. This will be the difference between the total tax payable during the period and the total tax receivable during the period. Either there will be a net value-added tax payable or a taxable amount.
If the amount in box 12 is greater than the amount in box 13, the difference is the amount of VAT you must pay. If the amount in column 12 is less than the amount in column 13, then you will be eligible to claim the refund of the net tax refund, or carry it forward to the next VAT refund period.
6. Additional reporting requirements
This section only applies to companies that have used and applied the provisions of the profit margin plan during this period. Otherwise, you can check “No” and proceed to the next section. This is only an additional report and will not have any financial impact on your VAT return.
7. Declaration and authorized signatory
In the above section, provide the authorized signatory details, and then tick the box next to the declaration section to submit the VAT return. Taxpayers can also choose to save the detailed information as a draft before submitting it.
Before submitting the VAT return, the taxpayer must be extremely careful when verifying all the details, and only click the submit button when he or she is sure that all the information is correct. After successfully submitting the VAT return, the taxpayer will receive an email from the FTA confirming that the VAT return has been submitted.
The UAE VAT return requires summary level details, i.e. combined details of sales, purchases/expenses, output VAT and input VAT. More importantly, the detailed information needs to be consolidated according to the format prescribed by the Federal Taxation Agency (FTA). If you look closely at the details in some boxes, it is not just a combined sale or purchase. Instead, it requires detailed description or detailed description of sub-levels based on qualifications. For example, at the Emirates level, standard-rated sales are required, and the taxpayer only needs to provide those expenditures or purchases for which he is eligible to recover input VAT, and so on. For companies, it is very difficult to manually organize and summarize transactions. Submitting a VAT return will run the risk of missing the deadline and eventually lead to violations. Therefore, companies must have the correct tax accounting software, which can not only help you account for VAT transactions, but also triangulate your business records to generate accurate VAT returns in a prescribed format. By using the correct tax accounting software, companies can easily generate accurate VAT returns with zero or minimal effort, and more importantly, avoid heavy penalties for undeclared or incorrectly submitted VAT returns. The amount ranges from Dh1,000 to Dh3,000.
For companies, tax accounting software will play a key role in defining the company’s success in the field of compliance. Companies need to carefully evaluate the software to help you easily transition to the new VAT system and simplify VAT accounting and declaration forms.
HOW TO FURNISH STANDARD RATED SUPPLIES IN VAT RETURN FORM 201
The VAT return 201 is divided into 7 categories, which are further subdivided into boxes where the taxpayer must provide the required detailed information. In this article, we will discuss information about providing detailed information on “Standard Rated Supplies” under the “VAT on Sales and All Other Outputs” section of the “VAT Return 201”
To learn more about how to submit a TAX refund and the details to be provided in other sections of the VAT refund form 201, please read How to submit a VAT refund in the UAE-Form VAT 201.
The “VAT on Sales and Other Outputs” section contains 8 boxes in which the sales and output VAT details are required to complete the TAX return. The following lists the available boxes under VAT for sales and all other outputs:
VAT sales details
As shown in the image above, you need to capture the detailed information in the following columns for each box:
Amount (AED): You need to mention the amount related to each Emirates’ sales and other output minus the value added tax in the AED.
Amount of Value Added Tax (AED): You need to mention the amount of output value added tax levied on sales in each emirate.
Adjustments (AED): Any adjustments to the output tax due to adjustments to bad debts need to be reported here for commercial property sales in the UAE. If these adjustments do not apply to you, please indicate “0”.
Let us discuss the details that need to be captured in the standard rated consumables, these details determine your output VAT liability,