The tax system in the United Arab Emirates (UAE) is simpler than that in most other jurisdictions, but a typical Value Added Tax (VAT) still applies, and local businesses are required to pay it.
The Federal Decree Law No. 8 of 2017 introduced VAT nationwide in 2018. This law governs the payment process, amounts, and filing procedures for returns with the Federal Tax Authority (FTA) of the UAE. All companies liable for VAT must register with the FTA and obtain a Tax Reference Number (TRN). The return is submitted at the end of each tax period and includes details of purchases and supplies, as well as the calculated amount of tax payable.
The above-mentioned regulation not only sets the standard rate, deadlines, and filing format, but also introduces penalties for errors and discrepancies in the preparation of documents and data entry. Therefore, to avoid potential issues, contact the specialists at Alliance Business Advisors. We will ensure the timely filing of the declaration, the accuracy of the data it contains, and provide all necessary professional support.
What is VAT, and how to calculate it
VAT is the difference between the tax payable and the tax accrued on purchases in the same period (input tax). Both taxes are calculated at a rate of 5%. If the amount payable exceeds the input tax, the company transfers the difference to the FTA. If the input tax is higher, the difference is returned. The calculation takes into account import and export transactions, as well as supplies with an exempt or zero tax rate.
To calculate VAT correctly, it is important to include all transactions for the current tax period. VAT in the UAE can be subject to not only payment, but also refund. To avoid accounting complications and avoid missing legislative changes, we recommend engaging experts from Alliance Business Advisors. We will ensure you meet all deadlines, requirements, and innovations.
VAT Return Filing Process
The return is submitted online through the FTA portal. To comply with local legislation, it is important to strictly adhere to:
- Submission deadlines: The return must be submitted within 28 days after the end of the tax period.
- Frequency: For companies with an annual turnover of less than AED 150 million, the tax period is quarterly; for others, it is monthly.
Failure to pay the tax within the prescribed time limits results in fines, the amounts of which are regulated by Cabinet Resolution No. 40 of 2017.
The last day for filing is the 28th day after the end of the tax period. If the date falls on a weekend or holiday, the deadline is extended to the next working day.
Approximate dates for filing declarations with the FNU for companies with a turnover of less than 150 million dirhams:
- Q1 (December-February) – until March 28;
- Q1 (March-May) – until June 28;
- Q1 (June-August) – until September 28;
- Q1 (September-November) – until December 28.
How Alliance Business Advisors can help you prepare and submit your VAT return
Our team provides comprehensive support for clients registered for VAT in the UAE:
- Preparation of a draft return after the end of the tax period.
- Agreement of the report with the client.
- Filing the return online.
- Providing a payment link.
If you have not yet registered as a taxpayer, we will help you obtain a TRN tax number and file your initial return.
By contacting experienced tax consultants, your company will get the following benefits:
- Timely updating of data in accordance with current regulations.
- Assistance in preparing reports and filing declarations.
- Consultations on tax issues.
- Complete confidentiality and compliance with legal regulations.
- Efficient interaction with tax authorities.
If your company has already encountered difficulties or incurred fines, our experts will help you identify a solution and minimize adverse consequences.
Frequently Asked Questions
What is the value-added tax rate in the UAE?
The standard VAT rate in the UAE is 5%. In some cases, a special rate of 0% is provided. Some goods and services are exempt from VAT. Our specialists will provide detailed information on the applicable rates for specific goods and services.
Who is required to file VAT returns in the UAE?
If the company's annual turnover is less than AED 187,500, VAT filing is not required. Registration as a taxpayer is optional for turnovers between AED 187,500 and AED 375,000. For turnovers exceeding AED 375,000, VAT registration and filing are mandatory.
How and when to file a tax return?
The tax return is filed electronically through the FTA portal. You can do it yourself, but the process is complex and requires knowledge of all local regulations and requirements. The declaration must be submitted within 28 days after the end of the tax period. To ensure accuracy and on-time delivery, it is recommended to contact tax consultants at Alliance Business Advisors, who are guaranteed to deliver the desired results.
What happens if I do not submit a VAT return?
In case of non-payment of VAT, you will be charged a penalty of 2% of the unpaid tax amount, which must be paid immediately. After 7 days, an additional 4% penalty is charged. A daily penalty of 1% will also be charged on each unpaid amount after a month from the due date, with a maximum of 300%.
What other services does Alliance Business Advisors offer?
We provide a wide range of corporate services in the UAE:
- business licensing,
- company registration,
- accounting support,
- visa support,
- assistance in interacting with banks, opening accounts, and much more.
We will prepare an individual offer for you that meets your goals and wishes.
