To avoid the hefty penalties by FTA its very important to file the returns for your business timely and accurately. Today almost more than 180 countries have accepted the procedure and this got spread worldwide at a faster pace. The middle east countries, specially the United Arab Emirates, working very hard on setting itself as a business hub, has understood the importance of VAT filling. Realizing this, the GCC countries have entered the VAT law and agreed at a VAT rate of 5%. If you are making plan to setup your business in UAE then you should know the VAT return filing and related process existing in UAE.
What is VAT return filing and VAT compliance?
In simple terms, VAT return filing states how much VAT is to be paid or reimbursed by the tax authorities. VAT return is calculated quarterly which will help the business to follow the business VAT path.
The taxpayer is responsible for calculating the VAT return during the filing process. It is calculated considering the following factors:
- Total sales and purchases of your business in the relevant return period.
- The amount of VAT you owe for sales.
- The amount of VAT you can claim for the purchases made.
In the end if you owe more VAT than you are able to claim, then you need to pay difference amount to the FTA. If the situation goes vice-versa, you can either ask for the refund of excess VAT or can carry forward the excess to next return period.