What is law about VAT return filing
As per the UAE VAT law, every VAT registered company mandatorily need to file and pay their quarterly VAT return by 28th of the following month. If the due date falls on Friday or Saturday, it moves to next working day. For example, if any company allotted his first VAT return period from 01st Sep, 2019 to 31st Oct, 2019 then the deadline for VAT return submission and VAT payment (if any) will be 28th Nov 2019. But, if it falls on Friday then the dead line will move to next working day, i.e Sunday 30th Nov 2019.. Businesses can avoid the VAT related penalties by accounting services or with full compliance with FTA VAT law.
VAT fines and penalties in uae:
Below are few major penalties types related to VAT return filing in UAE.
1.Late return filing and payment
If any VAT registrant missed the deadline for VAT return submission and payment due for the same, The Federal Tax Authority (FTA) will impose separate penalties for late filing of VAT return and late payment of VAT. For first instance FTA will impose penalty of AED 1,000 for late filing of VAT return and on every repetitive instance will attract penalty of AED 2,000. Late payment penalty will be 2% on unpaid VAT amount for first seven days after the deadline, which will increase by 4% if not paid within seven days. Further, if VAT amount not paid in a month, 1% each day will be imposed, until the penalty reaches 300% of the due VAT payable.
2. Nil VAT return
Mere filing the VAT return to FTA will not suffice the requirement of VAT law, it is also mandatory to pay the amount as per VAT return in order to complete the procedure to avoid the penalties. Also, nil VAT returns need to be filed if there is no business transaction. FTA allows VAT registered business to file previous period returns with applicable penalties.
3. Miscalculated VAT return
If any registrant has filed miscalculated VAT return, he can rectify the same by filing the voluntary disclosure form within 20 days of discovering the error with applicable penalty of AED 3,000. Any errors resulting net VAT payable or receivable less than or equals to AED 10,000 can be rectified in subsequent return without penalty and voluntary disclosure.
FAQs related to non-filing or late filing of VAT return in UAE
Q. Is there any grace period after VAT registration for new companies to file a VAT return?
A. NO, there is no such grace period for newly registered company, all VAT registered companies need to file quarterly VAT return on 28th of following month.
Q. Can I file my VAT return without paying the VAT amount?
A. Yes, you can file the VAT return without paying the VAT amount but late payment penalty will be imposed by FTA as explained above.
Q. If I have paid VAT amount on time to FTA, I still need to file the VAT return?
A. Yes, VAT return need to be filed on time. Timely payment of VAT amount will not suffice the VAT compliance requirement. If you pay VAT amount and fail to submit your return on time, penalty of AED 1,000 for late submissions will be imposed for first instance and AED 2,000 for every repetitive instance for 24 months.
Q. Do I need to maintain books of accounts to file the VAT return?
A. Yes, Complete Books of account and any information necessary to verify entries, including, but not limited to: annual accounts; general ledger; purchase day book; credit notes and debit notes need to be maintained and keep for next 5 years for audit purpose.
Q. If I submitted VAT return and later on came to know that, I have filed wrong VAT return, what need to do in such cases?
A. Voluntary disclosure need to be submit if net VAT payable or receivable is more than AED 10,000 within 20 business days.
This blog post is written by Mr. Dilip (Tax Adviser) at Flyingcolour Business Setup, Accounting & VAT Services in Dubai and UAE. Feel free to call our Tax Advisor today for a quality consultation relating your VAT related queries like VAT Health Check. Please send inquiry to email@example.com or or call +971 4 4542366.