FTA Issued guideline for filing VAT return and payment

VAT in UAE

The FTA hasissued a comprehensive guide to completing the VAT return and making payment. It is definitely worth reading regardless of whether you are completing the return yourself or getting professional help. The guide makes it clear which transactions should be reported in each box and like everything in tax, the devil is in the detail.

The first boxes, which identify you and your business, are prepopulated with the information entered on registration. For each of the seven emirates, you then record your standard rated (5 percent) supplies and VAT on these supplies in boxes 1a to 1g. Box 2 is for VAT refunded to tourists so is irrelevant for most businesses as you have to be registered with the FTA to participate in the scheme.

In box 3 you need to include supplies of goods and services under the reverse charge mechanism. This can be complicated so reading the guide is a must. Imported goods can be declared in either box 3 or box 6 depending on your customs declarations. Imported services will be declared in box 3. Boxes 4 and 5 are for zero-rated and exempt supplies where there is no VAT to declare but you need to report the sales values

Reporting your input tax is shorter and simpler; there are just two lines here to populate. Box 9 is for standard-rated supplies that you want to reclaim the VAT on. Be careful to exclude any non-recoverable VAT but you still need to report the inputs even though you will not be reclaiming the tax. Obviously, any exempt or zero-rated inputs would not be included here as there is no VAT to recover. Box 10 is for the input VAT side of the reverse charge entries and is the other component to what is reported in boxes 3, 6 and 7.

The return automatically calculates the VAT payable and recoverable and the net of these is the amount payable to the FTA. Remember to reconcile your VAT accounting ledger entries to your VAT return and adjust your accounting entries accordingly. Ideally, you want to be in a position where your accounting entries mirror what’s been reported on your VAT return, so if you were ever subject to a VAT audit, which could be up to five years later, you could provide the underlying detailed transactions to support the return totals you reported without discrepancies.