UAE VAT

Tax Returns and payment cycle

A majority of the small and medium businesses had their first tryst with Tax Return Filing and Payment of taxes in the month of April.

The FTA had initially given varying tax periods for businesses as and when they registered for VAT, however, subsequently, they streamlined the tax periods by considering businesses with over AED. 150 million turnover for monthly return filing and staggering the smaller businesses tax periods to end either on 31st March, 2018 or 31st May 2018, based on their own analysis of the submissions for tax registrations.  Consequently, they also updated the tax periods and the majority of the small businesses had their tax period endings changed from 31st January 2018 to 31st March or 30th April.

This along with a 28-day filing and payment period witnessed the first batch of small businesses getting ready to file their first tax returns and make the payments.  After the first tax period end date, every business follows a quarterly tax return and payment cycle.

In the meantime, the FTA has also released a list of software vendors certified by FTA as compliant to UAE VAT laws.  As a re-seller for ZOHO Books, we were aware of the efforts undertaken by ZOHO Books to get certified by FTA and were happy to note that they were in the first batch of certified vendors.  This also meant that most of our customers who were on ZOHO books based on our recommendations found the process very simple to navigate.

FTA has already shared the Tax Return formats and Audit File format requirements with the software vendors, hence, processing the transactions on these accounting systems results in the generation of a tax return report which replicates the online tax return form.  It is then only a matter of filling in the blanks using the report as the base.  Plus in the back-end, the Audit File is also available in case requested for.  All it needs is a proper VAT compliant accounting of transactions for the report to reflect the correct position of VAT.

Initially, the tax payment was restricted to e-dirhams, when the VAT law was released, subsequently, the tax authorities introduced the GIBAN number concept (GIBAN is the business Tax Account with FTA).  This meant that taxes can be remitted to the GIBAN number as an option to e-dirhams.  This made paying taxes also a very smooth affair as businesses could instruct their banks to transfer funds to the GIBAN account and settle their tax liabilities.

FTA also sends out an acknowledgement email within a few days of payment of having received the tax payment.

The effective systems deployed by the FTA authorities is also reflected in the fact, that those tax payers who breached their target date of 29th April, 2018 for tax payment, promptly got a notification of penalty for non-filing / payment on their FTA portal on the morning of 30th April, 2018.

Compliance is simple to achieve provided complacency is avoided.

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2018-05-01

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