VAT RETURN FILLING

What is the VAT Return: The official document to be completed by the Taxable Person and submitted to the Federal Tax Authority (“FTA”) at regular intervals detailing any output tax due and input tax recoverable and including any other information that is required to be provided. In this guide, we will refer to it as the “VAT return”. All VAT Returns should be submitted online using the FTA portal. The return can be submitted by the Taxable Person, or another person who has the right to do so on the Taxable Person’s behalf (for example, a Tax Agent or a Legal Representative).

Tax Period 

A Tax Period is a specific period of time for which the Payable Tax shall be calculated and paid.  The standard Tax Period applicable to a Taxable Person shall be a period of three calendar months ending on the date that the FTA determines. The FTA may, at its discretion, assign a different Tax Period, other than the standard one, to a certain group of Taxable Persons (e.g. in some cases businesses may be required to file VAT returns on a monthly basis).  Where a Taxable Person is assigned the standard Tax Period, he may request that the Tax Period ends with the month as requested by him, and the FTA may accept such a request at its discretion.

 The VAT Return must be received by the FTA no later than the 28th day following the end of the Tax Period concerned or by such other date as directed by the FTA. Where a payment is due to the FTA, it must be received by the FTA by the same deadline. 

Understanding tax liability  

Below are some key terms with respect to the operation of VAT, and how these could impact a Taxable Person’s tax liability.

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Tax Period 

A Tax Period is a specific period of time for which the Payable Tax shall be calculated and paid.  The standard Tax Period applicable to a Taxable Person shall be a period of three calendar months ending on the date that the FTA determines. The FTA may, at its discretion, assign a different Tax Period, other than the standard one, to a certain group of Taxable Persons (e.g. in some cases businesses may be required to file VAT returns on a monthly basis).  Where a Taxable Person is assigned the standard Tax Period, he may request that the Tax Period ends with the month as requested by him, and the FTA may accept such a request at its discretion.

 The VAT Return must be received by the FTA no later than the 28th day following the end of the Tax Period concerned or by such other date as directed by the FTA. Where a payment is due to the FTA, it must be received by the FTA by the same deadline. 

Understanding tax liability  

Below are some key terms with respect to the operation of VAT, and how these could impact a Taxable Person’s tax liability.

Output Tax

“Output tax” is the VAT a Taxable Person calculates and charges on its supplies of goods and services once it is registered for VAT. Output tax must generally be calculated on supplies made to other persons; however, in certain situations VAT might be required to be charged on supplies which were deemed to occur for VAT purposes or on supplies which are subject to the reverse charge provisions. The obligation to account for output tax arises at the tax point of the supply, i.e. at the date of supply. Once the date of the supply has taken place, the Taxable Person must account for the output tax in the VAT Return covering that Tax Period

Input Tax

From the recipient’s point of view, “input tax” is the VAT added to the price by the supplier when the recipient purchases goods or services which are subject to VAT. If the recipient is registered for VAT then they may be able to recover this input tax from the FTA, subject to the conditions below:  the Taxable Person has received and retained a tax invoice or other documentation evidencing the amount of VAT on the supply or import; and  the amount of VAT has been paid, or is intended to be paid, in whole or in part (in which case the amount of input tax recoverable shall be limited to the equivalent amount). Once the ability to recover input tax has been confirmed, the person is able to include the amount in the relevant VAT Return as an input tax deduction. 

Calculating tax liability

A registered person’s tax liability is simply the difference between the output tax payable for a given Tax Period and the input tax which is recoverable for the same Tax Period. Where the output tax exceeds the input tax amount, a payment of the difference must be made to the FTA. Where the amount of input tax exceeds the amount of output tax, a Taxable Person is entitled to a refund of VAT from the FTA.

Filing VAT Returns

For each Tax Period, a Taxable Person will be required to submit a VAT Return which contains details regarding the supplies made or received by the Taxable Person. With respect to sales and other outputs, the Taxable Person will need to report: 1. supplies of goods and services made which are subject to the standard rate of VAT per Emirate; 2. tax refunds you have provided to tourists under the Tax Refunds for Tourists Scheme, if you are a retailer and provide tax refunds to tourists in the UAE under the official tourists refund scheme; 3. supplies of goods and services received by the Taxable Person which are subject to the reverse charge provisions; 4. supplies of goods and services made which are subject to the zero rate of VAT; 5. supplies made which are exempt from VAT; 6. goods imported into the UAE and have been declared through UAE customs; and 7. where applicable, adjustments to goods imported into the UAE and which have been declared through UAE Customs.

With respect to purchases and other inputs, the Taxable Person should report: 1. purchases and expenses that were subject to the standard rate of VAT and for which you would like to recover VAT; and 2. any supplies which were subject to the reverse charge for which you would like to recover input tax. The amounts of VAT charged and input tax recoverable by the Taxable Person would then need to be netted off in the Tax Return. The resulting amount is the net VAT payable to, or to be refunded by, the FTA (i.e. the net VAT position).

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