Value-added Tax (VAT) was introduced in the UAE on January 1, 2018, to diversify the country's economy and reduce dependence on oil revenue.

 VAT being a consumption tax, adds value to goods and services during each stage of the supply chain. VAT-registered businesses must collect VAT from their customers, maintain proper records, and file VAT returns regularly. 

This article will provide a comprehensive guide on VAT Return Filing in the UAE.

1. Why is VAT Return Filing important?
2. Who is it important for?
3. What is the frequency of filing?
4. An easy-to-follow step-by-step process for submitting your VAT return filing.

Why is VAT Return Filing Important?

VAT return filing is crucial for businesses to comply with tax laws and avoid penalties for non-compliance. 

The UAE's Federal Tax Authority (FTA) requires all VAT-registered companies to file VAT returns regularly. The VAT return form summarizes the business's VAT transactions during the filing period, including the output VAT collected from customers and the input VAT paid to suppliers. 

Filing a VAT return allows the FTA to reconcile the VAT amounts reported by the business and ensures that the correct amount of VAT is paid.

Who is it Important for?

VAT return filing is important for all VAT-registered businesses in the UAE, regardless of their size or industry. Failure to file VAT returns can result in, 

• Fines
• Penalties, 
• Legal action, affecting the business's reputation and even its license to operate in the UAE.

Therefore, businesses must maintain accurate and complete records of their VAT transactions and file their VAT returns on time.

What is the frequency of VAT Return Filing?

The frequency of VAT return filing in the UAE depends on the business's annual turnover. 

The VAT return must be filed within 28 days of the end of the filing period.

Step-by-Step Process for Submitting VAT Return Filing

We have finalized the whole process into 7 steps for your ease.

Step 1: Log in to the FTA portal using your username and password.

Step 2: Click on the "VAT" tab and select "VAT 201- VAT Return" from the drop-down menu.

Step 3: Select the VAT return filing period you wish to file.

Step 4: Fill in the VAT return form with the relevant details, including sales and purchase invoices, output VAT, input VAT, and any other applicable information.

Step 5: Review the VAT return form for accuracy and completeness.

Step 6: Submit the VAT return form electronically.

Step 7: Pay any VAT liability due within the stipulated deadline.

VAT return filing is a crucial part of VAT compliance in the UAE. As a business owner, it is important to maintain accurate records of your VAT transactions and file your VAT returns on time to avoid penalties and legal action. 

If you need assistance with VAT compliance or VAT return filing, seek professional advice from us, INSPIRE. We are a reputable tax consultancy willing to help guide you throughout your business journey by avoiding tax loopholes.