For submitting vat returns please read instructions below to simplify your work flow:
This user instructions guide will help you understand the key steps to file a VAT Return online through the eServices portal. For each Tax Period, a Taxable Person will be required to submit a VAT Return which contains details regarding the supplies made or received by the Taxable Person.
Main Points to be noted while return preparation:
The standard Tax Period shall be a period of three calendar months ending on the date that the FTA determines.
The FTA may, at its discretion, assign a different Tax Period other than the standard one, to a certain group of Taxable Persons.
A Tax Return must be received by the FTA no later than the 28th day following the end of the Tax Period concerned or by such other date as directed by the FTA. Where a payment is due to the FTA, it must be received by the FTA by the same deadline.
Filing VAT Returns:
For each Tax Period, the Taxable Person shall report details in relation to sales and other outputs as well as purchases and other inputs. For details please refer to the VAT Returns full user guide. (You need to fill the details in prescribed format provided by FTA)
Steps to complete the process of submitting a VAT Return Form > First step Login to the FTA eServices portal and go to the ‘VAT’ tab whereby you will be able to access your VAT Returns. From this screen you should click on the option to open your VAT Return. > Second step Complete the Form: Fill in the following details: (These points are included in second step) 1. The sales and all other outputs as well as on expenses and all other inputs as follows: # the net amounts excluding VAT; and #the VAT amount;
2. Based on your Payable Tax for the Tax Period proceed to a payment of any payable tax to the FTA or request (if you wish) a VAT refund; and
3. Provide the additional reporting requirements in relation to the use of the Profit Margin Scheme during the relevant Tax Period.
>Third Step Submit the Form: Ensure all the details must be verified as per FTA Guidelines. carefully review all of the information entered on the form after completing all mandatory fields and confirming the declaration. Once you confirm that all of the information included in the VAT Return is correct, click on the Submit button.
>Fourth Step Pay the VAT Tax due (if applicable) through “My Payments” tab. Ensure payment deadlines are met.
Here you go your, Your returns Filed.
If you have any doubt then refer FTA website for more details.
Hope this will help you to understand VAT submission in simple steps.
Tax grouping for VAT purposes is an administrative easement available to businesses and a revenue protection measure for government: Creating a tax group has the effect of registering a single taxable person. A tax group is issued one VAT Tax Registration Number (TRN) for use by all group members, and only one tax return is required for all group members. Transactions taking place within a tax group are generally disregarded for VAT purposes, meaning that cash-flow or absolute VAT costs that might otherwise be suffered by the businesses concerned are eliminated. Moreover, revenue risks that might otherwise arise on significant intra-group transactions are also eliminated. Strict qualifying criteria must be applied to limit the use of the measure to those for which it is designed i.e. it is an administrative simplification measure, not one designed to enable tax avoidance at any level. Purpose of this document This document contains more detailed guidance for businesses interested in forming a tax group, adding members to or removing members from an existing tax group, and disbanding a tax group.
Who should read this ? This document should be read by all persons seeking to understand whether or not they are eligible to form a tax group, how to amend a tax group, and how to disband a tax group. It should also be read by those who are part of a tax group so as to understand their associated obligations.
Implications of grouping for VAT purposes
The effect of a tax group registration is that the members of the tax group are treated as a single taxable person for VAT purposes. This means that: Supplies made between members of the tax group will be disregarded for VAT purposes and therefore no VAT is chargeable on intra-group transactions; Only one VAT Tax Registration Number is issued for use by the group; The tax group submits only one tax return which summarises all supplies and purchases made by group members over the VAT period concerned; and One member of the tax group will be appointed as its ‘representative member’. All of the VAT obligations of the tax group, and all supplies made and received by it, are deemed to be carried out in the name of the representative member.
Important note to be considered: the members of a tax group are jointly and severally liable for any and all VAT debts and other such obligations of the group for the period during which they were members. That means that even when a business has left a tax group, it remains liable for the period of membership.
Eligibility to form a tax group Subject to certain criteria being fulfilled, two or more legal persons may apply to form a tax group. Details of each of the criteria that must be fulfilled by each of the members of a tax group are set out below. Business criteria Each member must be carrying on a business. Broadly, a business is defined as any activity carried on in any place (i.e. in the UAE or elsewhere) regularly (i.e. the activity is not a one-off event) and independently (i.e. by a business, not its employees). Generally, this means that a person that is not in business cannot form or join a tax group. Legal person criteria Each member of a tax group must be a legal person (i.e. they must be a company, government entity, or similar). A legal person is an entity that has legal personality formed under the relevant laws that is capable of entering into contracts in its own name. Typically, for example, a company would be a legal person, as it is formed under companies law and can enter into contracts. However, it is also possible for other entities to be created which are similar (e.g. the companies formed by Decree under local laws in the Emirates). A natural person (i.e. an individual) cannot create or join a tax group.
Establishment criteria Each member must be resident in the UAE, either by way of having its primary business establishment or as a consequence of having a fixed establishment in the country. A business establishment is usually the place where key management decisions affecting a business are made. A fixed establishment is a place which possesses the necessary human and technical resources sufficient to carry on a business. A foreign-owned subsidiary that has been established in the UAE can, under these criteria, qualify to be included in a tax group. A branch of a foreign-owned company can also qualify under the fixed establishment test. Related parties (and control) criteria Each member must be related to the other to a sufficient extent. In this context, “related” is taken to mean they share economic, financial and organisational ties (either in law, shareholding or voting rights). One person must be able to control the members.
Economic ties are indicated where, for example, there is a common interest in the proceeds of the business. Financial ties are indicated where, for example, one part of the business benefits the other. Organisational ties are indicated where, for example, you share common premises.
Noticeable Point: common sponsorship of two or more Legal Persons will, generally, give rise to the possibility of tax grouping but only where the control criteria can also be met in actuality. Where the sponsorship agreement is overridden by another agreement whereby the control criteria cannot, in actuality, be satisfied, tax grouping will not be possible.
Government Entities Additional criteria for Government Entities There are certain additional criteria which apply to Government Entities in respect of forming a tax group: Designated Government Bodies may only form or join a tax group with other Designated Government Bodies; Designated Government Bodies may not form or join a tax group with other Government Bodies (i.e. those Government Bodies which are not Designated); and Government Bodies that are not Designated and are registerable in their own right can form or join a tax group with other legal entities, subject to the usual tax grouping rules. Forming and amending a tax group Forming a tax group Once it has been determined that the prospective members are eligible to form or join a tax group, it is also necessary to establish whether that group is required to or eligible to register for VAT purposes. The VAT registration requirements can be satisfied where either – one prospective member alone satisfies the relevant registration requirements; or if taken together, the total value of supplies made by or expenses (which are subject to VAT), incurred by the prospective members satisfy the relevant registration requirements. The flowchart in Appendix A will assist to determine whether the tax group eligibility and registration tests have been met and an application can be submitted. An application to form a tax group will, subject to the necessary checks being satisfied, be treated as effective on either – the first day of the tax period following the tax period in which the application is received; or any other date as determined by the Federal Tax Authority (FTA). Applying to form a tax group As part of the registration process it will be necessary for you to decide who you wish to appoint as the representative member of the tax group. The representative member can be any one of the members of the proposed group. The tax returns of the group are submitted in the name of the representative member. Important: notwithstanding the appointment of a representative member, the members of a tax group are jointly and severally liable for all taxes and penalties due from the representative member.
VAT is a general consumption tax imposed on most supplies of goods and services in the UAE. By default, it is chargeable on supplies of goods and services throughout the territorial area of the UAE. This territorial area will also include those areas currently defined as both fenced and non-fenced Free Zones. For VAT purposes, both fenced and unfenced Free Zones are considered to be within the territorial scope of the UAE – and therefore subject to the normal UAE VAT rules – unless they fulfil the criteria to be treated as a Designated Zone as defined by the Federal Decree-Law on VAT1 and Executive Regulations2. Those Free Zones which are Designated Zones are treated as being outside of the territory of the UAE for VAT purposes for specific supplies of goods. In addition, there are special VAT rules in respect of VAT treatment of certain supplies made within Designated Zones. The effect of these rules is that certain supplies of goods made within Designated Zones are not be subject to UAE VAT. In contrast, supplies of services made within Designated Zones are treated in the same way as supplies of services in the rest of the UAE. Important: Free Zones meeting the criteria have been specifically identified by way of a Cabinet Decision as Designated Zones. Where a Free Zone is not a Designated Zone, it is treated like any other part of the UAE.
Identification of a Designated Zone A Designated Zone is an area specified by a Cabinet Decision as being a “Designated Zone” 3. Free Zones listed by the Cabinet Decision as being a Designated Zone can be found under the Legislation tab on the FTA website (www.tax.gov.ae). Although an area might be identified as a Designated Zone, it is not automatically treated as being outside the UAE for VAT purposes. There are several main criteria4
which must be met in order for a Designated Zone to be treated as outside the UAE for VAT purposes. These are as follows: 1. The Designated Zone must be a specific fenced geographic area. 2. The Designated Zone must have security measures and Customs controls in place to monitor the entry and exit of individuals and movement of goods to and from the Designated Zone. 3. The Designated Zone must have internal procedures regarding the method of keeping, storing and processing of goods within the Designated Zone. 4. The operator of the Designated Zone must comply with the procedures set out by the FTA. This means that where a Designated Zone has areas that meet the above requirements, and areas that do not meet the requirements, it will be treated as being outside the UAE only to the extent that the requirements are met. In addition, should a Designated Zone change the manner of its operation or no longer meet any of the conditions imposed on it which led to it being specified as a Designated Zone by way of the Cabinet Decision, it shall be treated as though it is located within the territory of the UAE5. Important: Only where a Designated Zone meets all the above tests it can be treated as outside the UAE for VAT purposes.
Entities within a Designated Zone Those businesses which are established, registered or which have a place of residence within the Designated Zone are deemed to have a place of residence in the UAE for VAT purposes6. The effect of this is that where a business is operating in a Designated Zone, it itself will be onshore for VAT purposes, even though some of its supplies of goods may be outside the scope of UAE VAT.
VAT registration Any person carrying on a business activity in the UAE and making taxable supplies in excess of the mandatory VAT registration threshold (i.e. a taxable person) must apply to be registered for VAT purposes.
Any other person that is making taxable supplies or incurring expenses (which are subject to VAT), in excess of the voluntary VAT registration threshold may apply to register for VAT purposes. Important: Designated Zone businesses are considered to be established ‘onshore’ in the UAE for VAT purposes. This means that they have the same obligations as non-Designated Zone businesses and have to register, report and account for VAT under the normal rules. It also means they can join a tax group (VAT group) provided they meet the required conditions.
————————————————————————————————————————- 1 Federal Decree-Law No. (8) of 2017 on Value Added Tax, hereafter ‘the Law’. 2 Cabinet Decision No. (52) on the Executive Regulations of Federal Decree-Law No.(8) of 2017 on Value Added Tax, hereafter the ‘Executive Regulations’. 3 Article 1, Executive Regulations: any area specified by a decision of the Cabinet upon the recommendation of the Minister, as a Designated Zone for the purpose of the Decree-Law. 4 Article 51(1), Executive Regulation.
