Explained: Which Payment Options to Choose on the UAE VAT (FTA) Website based on your Business

At MSI Auditors, our goal has always been to make sure our audience understands UAE VAT laws and its complexities.

Over 30 years of helping businesses flourish in the UAE, we have developed an understanding of where and how companies slip up financially. This goes double for companies having to deal with UAE VAT laws.

Here you will learn how the payment made to the FTA can be allocated, each scenario explained with an example.

The bottom line: Now, you will learn about a payment option on the FTA website which will help you allocate your payment depending what you’re trying to pay. 

On the FTA website, you could be paying a penalty, a current tax liability or an older one.

The UAE VAT payment options on the website are as follows:

  1. Tax liability cleared first
  2. Administrative penalties cleared first
  3. Oldest Liability cleared first
Payment option for VAT

Here’s an example of when to use what option:

If the business has the following liabilities-

  1. a) August Tax liability – AED 10,000/-
  2. b) August Administrative penalty – AED 2,000/-
  3. c) September Tax liability – AED 12,000/-
  4. d) September Administrative penalty – AED 2,000/-

And the business decides, makes a payment of AED 12,000/-

Scenario 1 

If tax liability cleared first is selected, then the remaining tax liability will be AED 10,000/- and the administrative penalty will be AED 4,000/-

Scenario 2

If administrative penalties cleared first is selected, then the remaining tax liability will be AED 14,000/- and the administrative penalty will be AED 0/-

Scenario 3 

If Oldest Liability cleared first is selected, then the remaining tax liability will be AED 12,000/- and the administrative penalty will be AED 2,000/-

For more professional advice on UAE VAT/tax payments, don’t hesitate to get in touch with us for a quick free consultation.

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