VAT return filing law
According to the UAE VAT law, every VAT registered company needs file and pay their VAT returns quarterly by the 28th of the subsequent month. In case the due occurs on a Friday or Saturday, it is moved on to the next working day. A little more explanation here. If the company allotted his first VAT return period from 1st Aug. to 30th Sept., the deadline would be 28th Oct. In case 28th Oct. is a Friday, the deadline will move to the next working day, i.e. the Sunday 30th Oct. VAT penalties can be avoided by businesses by using accounting services or with the full compliance of FTA VAT Law.
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Penalties and Fines in UAE
Some of the major penalties in accordance with VAT return filing are,
Late filing and payment
The FTA imposes separate penalties for missing the deadline in VAT return and submission and late filing. The penalty is AED 1,000 for the first instance in the late filing of VAT returns and AED 2,000 for every subsequent instance. The penalty for late payment is 2% of the unpaid VAT amount for the first seven days and 4% for not paying after seven days. And the VAT amount not being paid in a month, 1% for each day will be imposed until it reaches 300% of the VAT payable amount.
Zero VAT returns
In order to avoid penalties from the FTA, the more filing of the VAT return to the FTA is not sufficient. It is also important that the amount needs to be paid in accordance with the VAT law. In the case of no business transactions, you will have to file a Nil VAT return. Your previous period returns can also be filed with applicable penalties, and FTA allows the same.
Erred VAT Return
In case of a miscalculated VAT return, the person can rectify by filing a voluntary disclosure form within 20 days of the error being discovered. A penalty of AED 3,000 is applicable in such cases. An error in VAT payables less than or equal to AED 10,000 can be rectified without voluntary disclosure or penalty.
Some FAQs are linked to late filing or non-filing of VAT return in UAE
Do newly registered companies get a grace period for VAT return filing?
There is no provision as such. All VAT registered companies need to file their quarterly VAT returns on the 28th of the following month.
Is it possible to file a VAT return without paying the VAT amount?
You can always file a VAT return without paying the VAT amount. It is better to note that, as mentioned above, FTA imposes penalties in such cases.
Should I file my VAT return even if the VAT amount is paid on time?
Yes, the mere payment of the VAT amount will not suffice. You will have to file your VAT returns on time. Failing to submit your VAT returns on time, even if you have paid your VAT amount, will result in a penalty of AED 1,000 for the first instance and AED 2,000 for every subsequent instance.
Is it necessary to maintain book of accounts to file VAT returns?
Yes, all entries are to be maintained and kept for the next five years for audit. This includes the book of accounts, annual accounts, purchase day book, credit notes, general ledger, debit notes, etc.
In case of an Erred VAT return filing, what am I supposed to do?
You can submit a voluntary disclosure within 20 days if the net payable or receivable VAT amount is less than AED 10,000.
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