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A VAT Return is an official document that must be completed by a taxable person and submitted to the Federal Tax Authority (FTA) at specified intervals. It provides details on the output tax due, the input tax recoverable, and any other necessary information required by the FTA. In our VAT services in the UAE, we refer to this as the "VAT Return."

VAT Returns must be submitted online via the FTA portal. They can be filed by the taxable person directly or by an authorized representative, such as a tax agent or legal representative.

Tax Period:

A Tax Period is the specific timeframe for which VAT liabilities are calculated and settled. For most taxable persons, the standard Tax Period is three calendar months, ending on a date determined by the Federal Tax Authority (FTA). However, the FTA can assign a different Tax Period based on specific circumstances. For example, some businesses may be required to file VAT returns monthly.

Taxable persons assigned the standard Tax Period can request a change to align the period's end with a particular month. The FTA may approve such requests at its discretion.

VAT Return Filing Date:

The VAT Return must be submitted to the FTA no later than the 28th day following the end of the Tax Period or by another date specified by the FTA. Any payment due to the FTA must also be made by this 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 is the VAT that a taxable person calculates and adds to the price of goods and services provided once they are VAT-registered. This tax generally applies to supplies made to other parties. However, there are specific situations where VAT must also be charged on supplies considered to have occurred for VAT purposes or on supplies subject to reverse charge provisions.

The obligation to account for output tax arises at the tax point of the supply, which is the date when the supply is made. After this date, the taxable person must report the output tax in the VAT Return for the corresponding Tax Period.

Input Tax refers to the VAT added to the price of goods or services when purchased by a recipient. If the recipient is VAT-registered, they may be eligible to recover this input tax from the Federal Tax Authority (FTA), provided the following conditions are met:

  • Tax Documentation: The taxable person must have received and retained a tax invoice or other documentation that clearly shows the VAT amount on the supply or import.
  • Payment: The VAT amount must be paid, or intended to be paid, either in full or partially. If only part of the VAT is paid, the recoverable input tax will be limited to that paid amount.

Once these conditions are satisfied, the taxable person can claim the input tax recovery by including the amount in the relevant VAT Return as an input tax deduction.

A registered person’s tax liability is the net amount payable or refundable to the Federal Tax Authority (FTA) for a given Tax Period. This is calculated as follows:

  • Tax Liability Calculation: It is the difference between the output tax (VAT charged on sales) and the input tax (VAT paid on purchases) for the same Tax Period.

    • If Output Tax > Input Tax: The taxable person must pay the difference to the FTA.
    • If Input Tax > Output Tax: The taxable person is entitled to a refund from the FTA for the excess amount.

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:

Sales and Outputs:

  • Standard Rate Supplies: Report supplies of goods and services subject to the standard VAT rate, broken down by Emirate.
  • Tourist Tax Refunds: For retailers providing tax refunds under the Tax Refunds for Tourists Scheme, include details of these refunds.
  • Reverse Charge Supplies: Report supplies received that are subject to the reverse charge provisions.
  • Zero-Rated Supplies: Include supplies of goods and services subject to the zero VAT rate.
  • Exempt Supplies: Report supplies that are exempt from VAT.
  • Imported Goods: Detail goods imported into the UAE and declared through UAE customs.
  • Adjustments on Imports: Include any adjustments related to imported goods declared through UAE customs, if applicable.

Purchases and Inputs:

  1. Standard Rate Purchases: Report purchases and expenses subject to the standard VAT rate for which input tax recovery is sought.
  2. Reverse Charge Purchases: Include any supplies subject to the reverse charge mechanism where input tax recovery is sought.

The VAT Return will reflect the net VAT position by netting off the VAT charged on outputs against the input tax recoverable. The resulting figure represents the VAT amount payable to the FTA or the refund due.

For information on new company VAT registration, visit VAT Registration UAE.