6 Mistakes Everyone Makes When Filing UAE VAT Returns

If you’re one of those businesses or entrepreneurs who dares to file their own business VAT returns yourself, make sure you read the below common errors we see all our clients make (before they work with us).

Meanwhile, if you’re looking for accurate, trustworthy and consistent UAE VAT returns filing, contact us.

Making one of the below mistakes could expose your business to penalties. You might have to also do voluntary disclosures, which could lead to additional penalties and take A LOT effort and time to file. For a busy entrepreneur, this is not something you can afford.

1. Make sure to enter the sales in the right emirate 

A common mistake we notice is that business owners classify their standard rated sales based on the location of the customer. However, it is based on the businesses fixed establishment.

Fixed Establishment – Any fixed place of business, where you conduct business regularly & where sufficient human and technological resources are available to do business. An easy way to think of it is where you do business, not where your customer is located or does business.

2. Make sure to include zero rated and exempt sales 

We have seen many companies file the output and input VAT (the VAT payable and receivable) correctly, but do not mention the zero rated and exempt sales. Just because these transactions do not have a VAT impact does not mean you do not need to disclose it.

It is important to identify zero rated and exempt sales correctly, and disclose them correctly in the return submission.

3. Prepare an invoice wise working of the return 

It is important to maintain a detailed invoice wise working for each return. If there is an audit in the future done by the FTA, they will request this details.

The FTA will provide only 5 working days to respond to their queries. So as to not scramble at the last minute, it is better to prepare this working every time the return is filed.

4. Claiming UAE VAT Return on expenses that are not allowable 

You have to be very careful on not claiming input VAT on expenses that are not claimable. For example, entertainment expenses and purchase or vehicles (in most cases).

5. Account for RCM for imports 

RCM or reverse charge mechanism must be accounted for when importing goods or services.

In most cases there will be no impact on the VAT payable after this adjustment is made. The output VAT has to be accounted for the import in row number 3, 6 or 7. This must be claimed back in the input VAT section in row 10 of the return.

6 Make sure to file the return and make the payment on time 

This is something we have discussed in our earlier insights. Business owners and entrepreneurs who do not have a team of accountants normally get busy and miss out on filing the return on time, and obviously make the payment late. The penalties for this are very high.

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