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Abu Dhabi, UAETuesday 19 June 2018

VAT in the UAE: first tax returns must be submitted no later than February 28

Federal Tax Authority reminds businesses required to file monthly of deadline and online system for submission of returns

Shoppers at Carrefour in Mall of the Emirates. Businesses and consumers in the UAE have begun paying VAT since 1 January 2018. Reem Mohammed  /  The National
Shoppers at Carrefour in Mall of the Emirates. Businesses and consumers in the UAE have begun paying VAT since 1 January 2018. Reem Mohammed / The National

The Federal Tax Authority (FTA) has urged businesses to file their first VAT returns by no later than the last day of this month to avoid penalties.

The first tax reporting period since the January 1 rollout of a 5 per cent VAT in the UAE ended on Wednesday. VAT returns must be filed monthly by companies with annual turnover above Dh150 million, while businesses with revenue below that level must file quarterly.

“Taxable persons must comply with tax laws, submit tax returns, pay their due taxes within the specified time frames and keep records as required in tax legislation in order to avoid penalties,” said the FTA’s director general Khalid Al Bustani.

For some companies, exceptions have been made, “following requests from a large number of businesses subject to VAT”, said Mr Al Bustani.

The first tax period has been extended to three months in some cases, he said. The filing period will return to a monthly basis afterwards for these firms.

Businesses whose initial tax period was for the three months ending in March, have not been given any leeway, said the director general.

The UAE began implementing VAT along with Saudi Arabia as part of a planned GCC-wide levy as member countries seek new revenue streams amid lower oil prices.

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Businesses can file their returns online through the FTA’s portal and make payments through the e-dirham system, with those who do not have an account urged to create one “as early as possible”.

There are penalties for filing incorrect returns, starting at Dh3,000 as well as a Dh10,000 fine for a first-time failure to keep the required tax-related records.

An estimated 350,000 companies are subject to VAT in the UAE, but thousands had still not registered as of the last week of January.

The tax authorities have been working to to help them do so and are confident of ensuring all companies are registered relatively quickly compared to other countries, where it can take up to eight months to do so. Failing to register could result in Dh20,000 fine.

Don't get fined

The UAE FTA requires following to be kept:

  • Records of all supplies and imports of goods and services
  • All tax invoices and tax credit notes
  • Alternative documents related to receiving goods or services
  • All tax invoices and tax credit notes
  • Alternative documents issued
  • Records of goods and services that have been disposed of or used for matters not related to business