How To File VAT Returns In UAE: Step By Step Instructions

In 2018, the government of UAE introduced VAT in the country at a rate of 5%¹. This initiative was a step towards increasing overall revenue to provide better facilities. After this, VAT was imposed on goods and services, which then led to businesses registered under VAT submitting information to the government through VAT returns. Companies must file these returns on the FTA portal. 

Under any circumstances, if a business fails to file VAT return in UAE, there can be some severe implications. Therefore, businesses need to ensure that they not become a victim of the strict penalties. Are you a business owner wondering how to do that? Fret not! Filing your returns does not have to be a nail-biting experience. 

This article is aimed to be a UAE VAT filing guide, designed to help you steer through the process smoothly. With this guide, filing your return is just a few easy steps away. 

VAT returns filing stressing you out? Embee NextGen is here to help. We can help your business file VAT returns efficiently and ensure compliance with all legal requirements. 

How Does VAT In UAE Work?

VAT is charged at every stage of the supply chain. From when the raw materials are bought, to other stages like manufacturing, selling to the store , and finally selling to the customer—tax is added based on the value added at the respective stage.

Let us begin by understanding the basics of how VAT works with a simple example. We will understand it in 3 steps:

• Manufacturer to Wholesaler:
  A manufacturer sells a laptop to a wholesaler for 100 AED. This price includes 5 AED as VAT, which the manufacturer collects and remits to the UAE government.
• Wholesaler to Retailer:
  The wholesaler then sells the laptop to a retailer for 200 AED. This price includes 10 AED as VAT. However, the wholesaler does not remit the entire 10 AED to the government. Instead, since the wholesaler already paid 5 AED in VAT to the manufacturer, they subtract this amount from the 10 AED collected and remit the difference (5 AED) to the government. This difference represents the VAT on the value added by the wholesaler.
• Retailer to Customer:
  Finally, the retailer sells the laptop to a customer for 300 AED, which includes 15 AED as VAT. The retailer, having already paid 10 AED in VAT to the wholesaler, subtracts this from the 15 AED collected and remits the difference (5 AED) to the government. This 5 AED represents the VAT on the value added by the retailer.

Types Of Supplies Under UAE VAT Law

Under UAE VAT law, different types of supplies are categorized based on how they are taxed. Below are the different types of supplies:

Standard-Rated Supplies

These goods and services are subject to the 5% VAT charge rule.

The Zero-Rated Supplies

These items are taxed at 0%. However, as taxpayers you can claim relevant input tax—for example healthcare and educational services. 

Some more examples are exports outside the GCC, precious metals (gold and silver), and international transportation.

Exempted Supplies 

Supplies under this category are exempted according to the VAT law in UAE. Businesses cannot charge VAT nor can they claim any input tax. Examples include residential properties, undeveloped land, public transport, life insurance, and some financial services.

Deemed Supplies

These services do not fall under the definition of supply, but are still taxed. 

Examples include:

• Business assets that are given away without any consideration. 
• Transfer of business assets between UAE and other GCC states or vice versa.
• Goods used for non-business purposes where input tax was claimed. 

Out-of-Scope Supplies

These are completely outside the VAT system and aren’t taxed under UAE VAT law.

How To File VAT Return In UAE²

You can only file VAT returns in UAE on the FTA portal and the only method to do so is through an online process. Taxpayers have to manually file the purchases, sales, input and output VAT. 

There are seven sections on the VAT 201 form. The sections are-

• Details of the taxpayer. 
• The period of VAT return.
• VAT on sales and all other outputs.
• VAT on expenses. 
• The Net VAT due.
• Any additional reporting requirements.
• Authorized signatory and declaration. 

Here is the step-by-step process that you need to follow in order to file VAT return in Dubai

Step 1- EMARTAX Portal

Log your EMARTAX portal by using your registered username and password. Then, click on the navigation menu. Click on VAT and then click on ‘View All’. After this you will find ‘My Filings’ under it. Under this click on ‘File’ for the return period. Confirm all the instructions and guidelines in the check box. Press on ‘Start’ to proceed with your filing.

Step 2- The Filing

The window will open and display the filing period details based on the selected VAT return. You can use the offline template to enter your data. Just download it, fill it out, and then upload the Excel file. If needed, you can download the uploaded file to check for errors or clear the data to upload a new one. Enter the amount, VAT amount, and adjustments in the appropriate boxes.

Step 3- Filing Information

This step involves filling up all necessary information and can be a bit complex. Make sure you have all values and necessary information by your side. 

• In the first box that you see, fill in the standard rate sales made to corresponding emirate.
• The second box will automatically show the tax refunds that are given to tourists under the ‘Tourist Refund Scheme’ from the ‘Planet Tax Free system.’ Click on ‘View Details’ to review this data. 
• For the third box, you need to enter sales made under reverse charge provisions. 
• Below that in the fourth and fifth box fill the zero-rated and exempt sales. 
• In the sixth box data from customs will automatically be filled. You can click ‘View Details’ to check it. If the import data is incomplete or incorrect, use the seventh box  to make adjustments. 
• The eight box will show the total of from the first to the seventh box. It will summarize your total sales and tax liability for the return period.
• In the ninth box, enter the amount, VAT, and any adjustments for standard-rated expenses. Use the tenth one for reverse charge purchases. 
• The eleventh box will give the totals the ninth and tenth box, showing your total inputs for the period. Boxes twelfth and thirteenth  will show your total output and input taxes for the return period. 
• And at last the fourteenth box will display the tax payable or refundable for that period.

Step 4- Post Filing of Information

After filing all the information, select ‘Yes’ under ‘Profit Margin Scheme’ if you’ve used it; otherwise, choose ‘No’. Note- This scheme allows taxpayers an option to calculate VAT on the profit margin which is earned on the supply of goods instead of sale value. 

Then, click ‘Save as Draft’ to save your details, and hit ‘Next Step’ to move forward. This window will show the data you’ve entered. It gives you a chance for a final review before submitting your return. You can also click ‘Expand All/Collapse All’ to review each section individually. As you scroll down, you’ll see the declaration details automatically filled in from your VAT registration. Finally, check the box and click ‘Submit’ to file your VAT return. Once submitted, the screen will show the submission details, including a reference number for future use.

Step 5- After Submission

After submitting the return, make sure to pay the tax by the due date. You can also edit the submitted data until the due date. Additionally, you can download a copy of your VAT acknowledgment by clicking the ‘Download’ button.

When To File VAT Tax Return In UAE

The deadline to file VAT returns in UAE, whether monthly or quarterly, is the 28th of the month following the end of the VAT return period.

For example, if you’re filing a monthly VAT return for March, submit it  by the 28th of April. If you’re filing a quarterly return for the period from February to April, the deadline is the 28th of May. And, if the deadline falls on a public holiday or weekend, it moves to the next business day.

In some cases, the first tax period may be longer than three months. For instance, if your first tax period runs from 1st January to 30th April, your return is due by 28th May.

Conclusion

Filing your VAT returns in the UAE doesn’t have to be daunting. By following this step-by-step guide you can file them accurately and in time. Remember, the deadlines are strict, so staying organized and informed is key to avoiding penalties. Whether you’re filing monthly or quarterly, understanding the process will help you meet your obligations smoothly.

Frequently Asked Questions (FAQs)