VAT or Value Added Tax is charged on the consumption of services and goods. Whether you are an established business or a new one, filing returns of VAT can be highly beneficial. It helps to create a good image of the business in the government’s view and potential and present investors.
Currently, VAT is recognized all over the world, and more than 180 countries have adopted this procedure. As for the Middle East, countries like UAE who have been working tirelessly on setting themselves up as business hubs, have understood the benefits of VAT filing.
On realizing this, GGC countries have adopted the VAT mechanism and set up a VAT rate of 5%. In case you are designing a business plan for UAE or Dubai, you need to be aware of the filing of VAT returns and the process of doing the same.
How to Calculate VAT?
It is the responsibility of the taxpayer to calculate VAT returns during the process of filing. It is calculated based on the following factors:
- Total purchases and sales of your business in the period of relevance.
- The quantum of VAT owed for sales
- Quantum of VAT that can be claimed for purchases made.
Ultimately, if you owe more tax than what you can claim, you need to pay the balance. In the opposite situation, you can gain a refund of the excess VAT or follow the procedure by carrying up the excess to the next period of return.
Who Should File?
Every business that has already registered for VAT is required to file the returns of VAN, no matter the kind of VAT sales or registration, input tax, output tax, purchase, or sales. For avoiding mistakes while filing returns, the management can use the help of professional consultants.
VAT in UAE
The first date for which VAT was due was February 28, 2018. This was meant for businesses and individuals who were registered under VAT in UAE.
Businesses can file for VAT Returns by using the online portal of FTA (Federal Tax Authority). This portal is fashioned to accept returns online. Those who are eligible for VAT are required to offer all data like purchase, sales, etc., in a manual mode. This was because initially, software for data entry like Excel or XML was not available. So, persons will enter all details in the E-form of VAT returns at the portal.
To file returns for VAT return in Dubai accurately, you can take the help of audit firms in Dubai. In case you don’t register for VAT, the Dubai tax authorities can identify you and impose penalties on you. This is the reason why businesses and companies conduct their audits by Dubai auditors so that they stay safe in official audits.
VAT 201 is the name of VAT returns from where payers of tax will fill up all the needed information and submit it for completing the filing process of VAT returns.
VAT 201 Form Has Totally 7 Sections That Are As Follows:
- Details of taxable entity
- VAT imposable on sales and outputs
- VAT on inputs like expenditures
- The net amount of VAT due
- Extra needs of reporting
- Authorized signatory and declaration
For each section, various boxes are available, where payers of tax need to fill up all details for completing the filing process of VAT returns. Take note that you should provide all information in relevant boxes so as to avoid any potential problems.
To gain access to the 201 VAT return form, you must first log into the FTA’s E-services portal. You can log into the portal by using your login username as well as password. Soon after you log into the portal, choose the option of VAT, followed by VAT return and VAT 201. This step is vital for initiating the process of the VAT return.
When you click on VAT 201- VAT New Return, several sections will appear. Following are the ways to properly fill up these sections:
Details of taxable persons
In this section, you will key in detail like TRN or Tax Registration Number, besides your name and address. In case a tax agent based in Dubai is filing VAT returns on behalf of the taxpayer, they should also add Tax Agency Number (TAN) and TAAN (Tax Agent Approval Number).
The return period of VAT
In this section, you should key in the return period of your VAT, like in the year you are filling up the VAT return for. After you key in the needed information and the reference period of VAT returns, there will be auto-filling of the due date.
In case a business is unable to recover its VAT for Inputs, the tax year is crucial for them. Adjustments in such cases will be permitted in the first return, followed by the end of the tax year.
In case there is a reference for the VAT Return period, the impacted businesses will have to include their annual adjustments in the VAT returns. Such issues became applicable to companies after the 1st year of VAT return (from January 2019).
VAT on outputs like sales
In this section, add up all the details of taxable supplies like supplies applicable to mechanisms of reverse change, exempt supplies, zero rate supplies, supplies at the level of Emirates etc.
VAT on inputs like expenses
In this section, you must add details of expenses like purchases on which you paid VAT of 5%, including the recovered input tax.
Net VAT that is due
This section includes the payable VAT for the return period of VAT.
Additional needs of reporting
In case a business has applied or used any scheme of profit margin, they must fill this section. In case not, simply tick mark the NO option and proceed further. Note that this section has no financial impact on the VAT return.
Authorized signatory and declaration
It offers the details of signatories in this section and after filling the section of declaration, click on the submit option for submitting the forms of VAT return in UAE (Dubai).
VAT is a crucial tax, and if you are unaware of its nuances, it is good to get the help of VAT consultancy to avoid any VAT penalties. Get the help of VAT experts and their advice about VAT registration and filing services of VAT returns.
Online filling of VAT seems simple, but you can get lost in their details. Submission of wrong returns can invite penalties. So, it is always advisable to take the help of professional auditors from Dubai for making hassle-free VAT returns.