Mastering VAT Compliance and Reporting in Dubai: Key Deadlines and Best Practices
The VAT introduction in UAE has necessitated business owners to understand the impact of consumption tax on goods and services sales. Not adhering to the rules and regulations regarding VAT can lead to significant monetary punishments and penalties. The compliance requirements apply to tax-registered businesses operating within the UAE mainland and free zones. Staying updated on the VAT processes and reporting is crucial for business owners to ensure compliance.
Filing Deadlines 2023
Businesses are required to submit their tax returns within 28 days after the conclusion of the tax period. Businesses with an annual turnover of less than AED150 million need to file their taxes every quarter, whereas those with an annual turnover of AED150 million or more must do so monthly. However, certain businesses may be given a different tax timeline by the FTA.
It is best recommended to get in touch with a reliable VAT Consultant in Dubai to never miss any deadline.
Report Preparation: General Guidelines
UAE authorities provide a cooling-off period for filing returns. This is done to ease the reporting and compliance burden on companies. Given below are some of the major guidelines that businesses need to keep in mind
- The filing process requires companies to log in to the FTA (Federal Tax Authority) portal with their registered username and password.
- Next, go to the e-services section and select the VAT 201 – New VAT Return option to commence the VAT Return form. If the process seems difficult, businesses can contact a VAT advisory to get the relevant support for the process.
- Companies need to include all the standard-rated supplies in reporting.
- For non-established businesses, supplies must be reported in the Emirate where the supply is received.
- Companies are required to report all zero-rated as well as VAT-exempt supplies
- Any imported goods through UAE customs must be reported.
- Additionally, goods imported into the UAE must be disclosed under the applicable customs regulations and procedures, and any necessary adjustments or rectifications must be made accordingly..
- For standard-rated expenses, the VAT amount should be stated as the input tax to recover the VAT.
Understandably, business owners find it challenging to keep up with the format and requirements. Sometimes it is intimidating and confusing to take care of reporting all on your own. It is advisable to consider VAT registration assistance for the process.
E-Invoicing: Latest Update
In the UAE, taxpayers are required to preserve electronic records in the format that was originally utilised for their creation, transmission, or receipt, and the genuineness of the invoicing source must be ensured. The e-Procurement system is employed in the UAE to automate the complete procurement process up to the point of payment. The process must be followed carefully to ensure correct reporting and invoicing.
Tips to Follow
- Companies must review their data carefully. This includes all information regarding audit and risk management. This is to avoid submitting documents that are full of errors.
- Avoid making basic mistakes in filing their returns, such as using the wrong form for filing returns or not reporting accurate sales figures.
- Companies should keep in mind the concept of voluntary disclosure and rectify mistakes in VAT returns as soon as possible to avoid penalties.
- Foreign companies that have a license to operate in the UAE but do not conduct any sales should also essentially file reports quarterly.
Conclusion
To summarise, companies functioning in the UAE must adhere to VAT regulations since not doing so can lead to significant fines and penalties. Business owners need to stay informed about the key deadlines and best practices for VAT compliance and reporting. It is recommended to seek a reliable VAT expert to avoid missing deadlines, prepare accurate reports, and comply with other VAT requirements.