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VAT Return Filing

It’s been more than a year since the United Arab Emirates (UAE) has introduced the Value Added Tax (VAT) from January 1, 2018. Taxpayers were obliged to file their VAT return on monthly and quarterly basis depending on the period set by Federal Tax Authority (FTA) on their VAT registration. The taxpayers have to submit their VAT return on or before 28th day of the month following their tax period or first business day after, in case of public holiday or weekend. Failure to meet the specified deadline would mean penalties on the part of the taxpayer.

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During the VAT return preparation, a number of certain wrong practices were identified which become a major pitfall across businesses. These wrong practices are summarized below:

1.      Inclusion/Recovery of the following input VAT which do not meet the rules set out in the VAT Executive Regulations

          a.      Supplier’s tax invoices issued in other person’s name and not by the registered Company

          b.     Supplier’s tax invoices issued under the employees name

          c.      Supplier’s tax invoices issued in other currency (USD and Euro) and not converted in AED

          d.      Supplier’s tax invoices having no total amount

          e.      Supplier’s tax invoices that are not clear and cannot be read

          f.       Supplier’s tax invoices that are in hand writing

         g.      All expenses related to company vehicle as it available for personal use kindly refer to Article 53 in the Cabinet Decision No. (52) of 2017

          h.     Invoices issued for meals and entertainment

           i.       Insurance expenses allocated to employees’ dependents

           j.       Petrol bills that does not show the plate number of the vehicle and it should be under the ownership of registered Company

2.      Use of Reverse Charge Mechanism (RCM) on the amount reflected on pre-populated box 6 of the UAE VAT return without proper matching of data on the records of the Company

3.      Some businesses are not applying the reverse charge to imported services from foreign purchases

4.      Businesses under Designated Zones were applying VAT on the supplies which should be treated as outside the scope of VAT

5.      Lack of accounting database for the details such as Tax Registration Number (TRN) of vendors and customers

 

Taxpayers should be wary of the wrong practices mention and should start to mitigate the issues. You are always beating the deadline for the filing in order to avoid the late filing penalty. Hence, are you filing the correct VAT return?

 

For consultation and inquiries on your VAT return filing, feel free to reach us! Our team of VAT Compliance professionals can help you prepare, implement and manage your VAT Return Filing requirements. Get in touch and learn more by contacting Augusto Dela Cruz (augusto.cruz@abbasaccounting.ae) at +971 55 389 1625.

 

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