The Federal Tax Authority (FTA) has urged businesses whose first tax period ends on January 31, to file their tax returns before February 28. The tax returns are to be submitted on a monthly or quarterly basis, as determined by the FTA based on the annual revenue of the business. Penalties will be given to those who fail to submit tax returns and pay due taxes on time
The first tax reporting period since the January 1 rollout of a 5 per cent VAT in the UAE ended on January 31. VAT returns must be filed monthly by companies with annual turnover above AED150 million, while businesses with revenue below that level must file quarterly.
The authority had made a number of adjustments to the first tax periods for value added tax (VAT), which it introduced in January this year, according to FTA director general Khalid Ali Al Bustani.
The adjustments included extending tax periods from one to three months for some businesses in January while returning to a monthly basis later on.
The first quarterly tax period was meant to expire by the end of January or February 2018 but was stretched out and merged with the following period, making the first period four months for some businesses and five for others.
Businesses whose first tax period was three months ending in March 2018 were not included in the adjustments.
Taxable Persons must comply with tax laws, submit tax returns, pay their due taxes within the specified timeframes, and keep records as required in tax legislation in order to avoid penalties.
According to Federal Decree-Law No. (08) of 2017 on Value Added Tax, the standard Tax Period applicable to a Taxable Person shall be a period of three calendar months ending on the date that the Authority determines. The FTA may assign a Person or class of Persons a shorter or longer Tax Period where it considers that a non-standard Tax Period length is necessary or beneficial to reduce the risk of tax evasion, enable the Authority to improve the monitoring of compliance or collection of Tax revenues, and reduce the administrative burden on the Authority or the compliance burden on a Person or class of Persons.
According to the Executive Regulation, a Tax Return must be received by the Authority no later than the 28th day following the end of the Tax Period concerned. A Taxable Person shall settle Payable Tax in relation to a Tax Return using the means specified by the Authority so that it is received by the FTA no later than the date specified.
The Federal Tax Authority has provided a number of methods to process the payment of any tax via the e-Dirham system. Businesses that do not have an e-Dirham account are advised to apply for one as early as possible. Accounting records are to be kept in a format that enables the Authority to verify that person’s tax obligations, for a period of five years after the end of the tax period.
The Taxable Person should keep the following records:
- Records of all supplies and imports of goods and services;
- All Tax Invoices and Tax Credit Notes, or
- Alternative documents related to receiving goods or services;
- All Tax Invoices and Tax Credit Notes, or alternative documents issued;
- Records of goods and services that have been disposed of or used for matters not related to business
Tax returns must include the following in the tax period:
1. The value of standard-rated supplies made and the output tax charged.
2. The value of zero-rated supplies made
3. The value of exempt supplies made
4. The value of any reverse-charged supplies received
5. The value of expenses incurred (applicable to businesses that require to recover input tax and the recoverable tax amount)
6. The total amount of tax due and recoverable input tax for the tax period
7. The payable tax (or repayable) for the tax period.
According to the Executive Regulation, a Tax Return must be received by the Authority no later than the 28th day following the end of the tax period concerned.