Shuraa Tax Blog

Author: Ritish Sharma

  • Tax Compliances in UAE: Latest Updates

    Tax Compliances in UAE: Latest Updates

    Tax compliance in the UAE has become an important part of running a business. Over the years, the country has introduced structured tax systems such as VAT, Corporate Tax, and Excise Tax. Even though the UAE is still known as a business-friendly destination, companies are now expected to follow clear tax rules and meet regular reporting requirements.

    Staying compliant helps businesses avoid penalties, reduce risks, and keep their operations running without interruptions. Simple mistakes like late filings, incorrect returns, or missing updates can create unnecessary problems. Understanding how UAE taxes work and what’s currently required can save both time and money in the long run.

    UAE tax regulations are updated from time to time, with new rules, clarifications, and compliance deadlines announced by the Federal Tax Authority (FTA). These changes can affect how you file returns, keep records, or calculate taxes.

    What are the Different Kinds of Taxes Applicable in the UAE?

    Over the past few years, the UAE has introduced new tax laws to align with global standards while maintaining its position as an attractive place to do business. Knowing which taxes apply to you is the first step toward staying compliant.

    1. Corporate Tax (CT)

    Corporate Tax is a direct tax on business profits. While the 9% rate is low by global standards, the rules around who pays what are becoming more detailed.

    The 9% Threshold:

    You only pay the 9% rate on profits above AED 375,000. If your profit is below this, your rate is 0%, but you still must register and file a return.

    Small Business Relief (SBR):

    If your annual revenue (total sales, not just profit) is AED 3 million or less, you can elect to be treated as having zero taxable income until the end of 2026. This means no tax and much simpler paperwork.

    Free Zone Rules:

    Companies in Free Zones can keep their 0% tax status on “Qualifying Income.” However, they must now maintain “Substance” (having a real office and employees in the zone) and have their accounts audited by a certified firm.

    2. Value Added Tax (VAT)

    VAT is a consumption tax charged on most goods and services in the UAE. Businesses that cross the mandatory registration threshold must register for VAT, charge it on taxable supplies, and file regular VAT returns with the Federal Tax Authority. Some supplies are zero-rated or exempt, depending on the nature of the activity.

    The Mandatory Limit:

    You must register for VAT if your taxable sales/imports hit AED 375,000 over the last 12 months.

    3. Excise Tax

    Excise Tax is applied to specific goods that are considered harmful to health or the environment, such as tobacco products, energy drinks, and sugary beverages. Businesses involved in manufacturing, importing, or storing excise goods must comply with strict registration, reporting, and payment requirements.

    Sugar-Based Tiers: Instead of a flat 50% tax on all sweet drinks, the tax is now based on grams of sugar per 100ml:

    • High Sugar (8g+): AED 1.10 per litre.
    • Medium Sugar (5g–8g): AED 0.80 per litre.
    • Low/Zero Sugar: 0% tax (though artificial sweeteners must still be registered).

    The 100% Club: Tobacco products, electronic smoking devices, and energy drinks remain taxed at a flat 100% of their retail price.

    4. Withholding Taxes (WHT)

    Withholding tax is a tax collected by the payer (like a business) on behalf of the recipient (like a foreign supplier). Currently, the UAE has set the WHT rate at 0%. This is a major advantage for companies that hire foreign consultants or pay royalties abroad, as it keeps cash flow moving freely.

    For very large multinational groups (earning over €750 million globally), a new Domestic Minimum Top-up Tax ensures they pay at least a 15% effective tax rate in the UAE, aligning with global efforts to prevent tax avoidance.

    5. Other Relevant Levies

    While not always called taxes, these fees are part of your ‘cost of doing business’ in the UAE:

    • Customs Duties: Most goods imported from outside the GCC face a 5% duty. Note that many Free Zone companies are exempt from this unless they sell their goods into the local UAE market.
    • Property Transfer Fees: In Dubai, for example, there is a 4% fee on the sale value of property. This is usually split 50/50 between the buyer and seller, though contracts can vary.
    • Digital Transformation Fees: The FTA has cancelled fees for paper certificates. Tax Registration Certificates are now issued as free digital copies with QR codes for instant verification.

    Recent Corporate Tax Updates in the UAE (As of 2026)

    The UAE’s corporate tax system has been rapidly evolving since its introduction in 2023.

    The First Major Filing Deadlines are Here:

    For many businesses, 2026 is the year the first tax return is actually due. The deadline is strictly nine months after the end of your financial year.

    • January–December Financial Year: If your first tax period ended on December 31, 2025, your filing and payment deadline is September 30, 2026.
    • April–March Financial Year: If your period ends March 31, 2026, your deadline is December 31, 2026.

    Note: Even if your profit is zero or you qualify for relief, you must still file a return.

    Small Business Relief (SBR):

    The Small Business Relief remains the most vital tool for startups, but it has a built-in expiration date. Resident businesses with revenue of AED 3 million or less can elect to be treated as having “zero taxable income.” This relief is currently set to apply only for tax periods ending on or before December 31, 2026.

    If you choose SBR, you cannot carry forward any tax losses or net interest expenses to future years. Businesses expecting high growth in 2027 should weigh whether it’s better to pay a little tax now to save their losses for later.

    Latest VAT Compliance Changes in the UAE (As of 2026)

    The UAE has introduced a set of important updates to its Value Added Tax (VAT) rules to make compliance clearer, strengthen enforcement, and align the system with international standards.

    Five-Year Deadline for VAT Credits & Refunds:

    A major compliance update is the introduction of a five-year limitation period to claim or use excess VAT credits and refunds. After this period, any unused VAT credit will expire permanently if not claimed or offset.

    This means that VAT refunds must be claimed within 5 years from the end of the relevant tax period. Legacy VAT credits that will expire soon may need immediate action.

    Launch of the E-Invoicing System (EIS):

    The UAE is moving away from PDFs and paper. Starting in July 2026, the government will begin testing a national e-invoicing system. Invoices will be sent to the FTA in real-time as they are issued, making manual errors much riskier. If an invoice is not issued through the approved system once it becomes mandatory for your tier, it may be considered invalid, and the buyer will be denied the right to recover input VAT.

    No More Self-Invoicing for Reverse Charge:

    Under the updated rules, businesses applying the reverse charge mechanism no longer need to issue internal self-invoices for these transactions. This reduces a significant administrative step, especially for importers and companies receiving cross-border services.

    Stronger Anti-Evasion Controls:

    To protect the tax base, the FTA now has clearer powers to deny input tax deductions that are linked to fraudulent or artificial transactions. This aligns with global efforts to tighten anti-avoidance measures and promotes honest reporting.

    Updates on Excise Tax in the UAE (As of 2026)

    Excise Tax in the UAE continues to evolve in 2026, with key changes aimed at improving public health outcomes, tightening compliance, and making the tax system more transparent and predictable for businesses.

    Introduction of a Tiered Sugar-Based Excise Tax:

    As of January 1, 2026, the old 50% flat tax on all sweetened drinks has been replaced. The tax is now volumetric, meaning it is charged as a fixed amount of Dirhams per litre, depending on how many grams of sugar are in the drink.

    Category Sugar Content (per 100ml) 2026 Tax Rate
     High Sugar  8 grams or more AED 1.10 per litre
     Moderate Sugar  5 to 7.99 grams  AED 0.80 per litre
     Low / Zero Sugar  Less than 5 grams 0% (Exempt)

    Artificial sweeteners (like Stevia or Aspartame) do not count as sugar in this calculation. If a drink uses only artificial sweeteners and has 0g of real sugar, it qualifies for the 0% tax rate.

    Category Shift for Carbonated Drinks:

    In a big change for 2026, Carbonated Drinks are no longer a separate excise category. Previously, all sodas were taxed at 50% just for being bubbly. But now, they are simply treated as Sweetened Drinks. If a brand reformulates a soda to have less than 5g of sugar, it can now be sold excise-free, even if it is still carbonated.

    Mandatory Lab Certification:

    You can no longer just claim your drink is low sugar. To benefit from the lower tax tiers, businesses must:

    • Obtain a Lab Report: All products must be tested by a MOIAT-accredited laboratory (such as Dubai Central Lab or SGS).
    • Register the Certificate: This report must be uploaded to the FTA’s EmaraTax portal.

    Transitional Relief and Excise Tax Deductions:

    The UAE’s tax authorities have also introduced specific provisions under FTA Decision No. 11 of 2025 that allow businesses to claim limited deductions where excise tax was previously paid under the old rules, but the new tiered model results in a lower tax amount – provided certain conditions are met (e.g., products remain unsold and proper documentation is supplied).

    Tips for Smooth Tax Compliance in the UAE

    Here are some expert-backed tips to help you stay on track.

    1. Don’t Treat Compliance as a One-Time Task: Tax and regulatory compliance is ongoing, not something you handle only at year-end. Track deadlines throughout the year for VAT, Corporate Tax, and UBO. Review compliance requirements whenever there’s a business change (new activity, revenue growth, expansion).
    2. Maintain Accurate and Updated Records: Clean and well-organised records form the backbone of tax compliance. Keeping proper invoices, contracts, bank statements, and accounting records makes filings smoother and protects businesses during audits or reviews.
    3. Use the Right Accounting and Compliance Tools: Reliable accounting software helps businesses track transactions accurately, prepare tax returns efficiently, and meet deadlines with confidence. With digital initiatives such as e-invoicing gradually rolling out, preparing systems early can save time and prevent disruptions later.
    4. Conduct Periodic Internal Reviews: Regular internal reviews help identify gaps or errors before they become serious issues. Reviewing tax returns, compliance filings, and supporting documents from time to time allows businesses to correct mistakes proactively and stay aligned with regulatory expectations.

    Bonus Tip: Get Professional Support to Stay Fully Compliant

    Even with the best internal processes, tax compliance in the UAE can become complex, especially with regular updates to Corporate Tax, VAT, Excise Tax, UBO, and reporting requirements. This is where professional support can make a real difference. Shuraa Tax supports businesses with end-to-end taxation services in the UAE. From Corporate Tax and VAT registration to return filing, compliance reviews, advisory, and audit support, the team helps businesses stay aligned with UAE tax laws at every stage.

    With expert guidance, businesses can avoid costly mistakes, stay updated with regulatory changes, and focus more on growth instead of compliance stress.

  • What are the Types of Taxes in the UAE?

    What are the Types of Taxes in the UAE?

    The UAE is known around the world as one of the most tax-friendly countries. One of the biggest attractions for expats, investors, and entrepreneurs is that there’s no personal income tax or capital gains tax here. In fact, Dubai and Abu Dhabi have even been ranked among the most tax-friendly cities globally, which makes the UAE a hotspot for people who want to live, work, and grow their businesses in a low-tax environment.

    That being said, the UAE isn’t completely tax-free. Over the past few years, the government has introduced several types of taxes to support economic growth and reduce reliance on oil revenues. These include the 5% Value Added Tax (VAT) introduced in 2018, the 9% Corporate Tax that started in 2023, as well as Excise Tax on certain goods, Customs Duties on imports, and municipality and tourism-related fees.

    So, let us break down the main types of taxes in the UAE in simple terms, so that both residents and businesses can better understand how the system works and what it means for them.

    Does Dubai Have Taxes?

    Dubai is often seen as a tax-free city, but the reality is a bit more nuanced. While there is no personal income tax, no capital gains tax, and no inheritance tax, Dubai does have certain other taxes and fees that residents, businesses, and visitors should know about.

    Some of the key taxes include:

    • Value Added Tax (VAT)
    • Corporate Tax
    • Excise Tax
    • Customs Duties
    • Municipal and Tourism Taxes

    So, while Dubai doesn’t tax personal income, it does have a structured system of indirect and business-related taxes.

    Types of Taxes in the UAE

    Here are the different types of taxes in Dubai and other Emirates for businesses and individuals:

    1. Value Added Tax (VAT)

    Value Added Tax (VAT) is a consumption tax that is levied on the supply of most goods and services at each stage of the supply chain. While businesses collect and account for the tax on behalf of the government, the tax is ultimately borne by the end consumer.

    Current VAT Rate:

    The standard VAT rate in the UAE is 5%, which applies to most goods and services. This is actually quite low compared to many other countries around the world.

    Types of VAT in the UAE:

    The UAE has three main VAT categories:

    • Standard Rate (5%): This applies to most things you buy – groceries, clothes, electronics, restaurant meals, hotel stays, and most services.
    • Zero Rate (0%): Exports outside the GCC, international flights, some education services (schools, universities), healthcare services (approved treatments, medicines), and investment-grade precious metals. Businesses still need to report these in VAT returns but at 0%.
    • Exempt: Some goods and services are completely exempt from VAT, meaning no tax is charged and businesses can’t claim input tax credits on these items.

    Who needs to register for VAT in UAE?

    Businesses must register for VAT if their annual turnover exceeds AED 375,000. There’s also a voluntary registration option for businesses with turnover between AED 187,500 and AED 375,000. If you’re a non-resident business making supplies in the UAE where VAT should be charged, you need to register regardless of your turnover amount.

    VAT Refunds for Tourists:

    Visitors can claim a VAT refund on purchases over AED 250 (including VAT) when shopping at participating stores, similar to tax-free shopping in other countries.

    How VAT works (example):

    If a restaurant sells a meal for AED 100, it must add 5% VAT (AED 5). The customer pays AED 105, and the restaurant passes AED 5 to the Federal Tax Authority (FTA). The restaurant can also claim back VAT it paid on supplies (like ingredients).

    2. Corporate Tax (CT)

    Corporate Tax (CT) is a direct tax levied on the net profit or taxable income of corporations and other businesses from their activities. It is a significant shift in the UAE’s long-standing, low-tax environment.

    Current Corporate Tax Rates:

    The UAE has a three-tier corporate tax system:

    • 0% on profits up to AED 375,000.
    • 9% on profits above AED 375,000 (one of the lowest corporate tax rates globally).
    • 15% on certain large multinational companies with global revenues over EUR 750 million, following OECD’s global minimum tax rules.

    Who pays Corporate Tax in the UAE?

    • All mainland companies.
    • Free Zone companies are also within scope, but qualifying free zone income (such as trade with outside UAE or other free zones) can still enjoy 0% tax, provided they meet the UAE’s substance rules.
    • Foreign companies with a permanent establishment in the UAE.

    Exemptions:

    • Government entities and government-controlled companies.
    • Extractive industries (like oil & gas) are taxed separately by the emirates.
    • Certain non-profits, charities, and public benefit organisations (if approved by the Cabinet).

    What Counts as Taxable Income?

    Corporate tax is calculated on net taxable profits, which means:

    • Your total business income
    • Minus allowable business expenses
    • Minus any applicable deductions or exemptions

    Deductions & Reliefs:

    • Businesses can deduct expenses like salaries, rent, utility bills, and R&D costs before calculating taxable income.
    • Losses can be carried forward and offset against future taxable profits.
    • Small Business Relief: Companies with revenues below AED 3 million (until 2026) can elect for relief and be treated as if they made no taxable income.

    3. Excise Tax

    Excise tax is an indirect tax levied on specific goods that are deemed to be harmful to human health or the environment. It is a form of “sin tax” and was introduced to discourage the consumption of these products and to generate additional revenue for the government. Unlike VAT, which is applied at each stage of the supply chain, excise tax is a one-time tax collected at the point of import or production.

    Products & Rates:

    • 100% on tobacco and tobacco products.
    • 100% on energy drinks.
    • 50% on carbonated drinks (except plain sparkling water).
    • 50% on sweetened drinks (introduced in December 2019).
    • 100% on electronic smoking devices and related liquids.

    Who pays the Excise Tax in the UAE?

    Excise tax is paid by importers, producers, and stockpilers of excisable goods. Ultimately, the cost is passed on to the consumer through higher retail prices.

    4. Custom Duties

    Customs duties are taxes levied on goods imported into the UAE. They are collected by UAE Customs at the border and then distributed among the emirates or GCC states (since the UAE is part of the GCC Customs Union).

    Standard Rate:

    Generally, 5% of the cost, insurance, and freight (CIF) value of most goods.

    Exceptions & Special Rates:

    • 50% duty on alcohol.
    • 100% duty on tobacco products.
    • Some goods may be subject to higher/lower rates depending on trade agreements.

    Free Zones Advantage:

    Goods imported into the UAE Free Zones are exempt from customs duties as long as they stay within the zone. If they are later imported into the mainland, then customs duty applies.

    Exemptions:

    • Goods imported within the GCC states (if meeting the rules of origin).
    • Diplomatic and military imports.
    • Personal belongings and household items of UAE nationals returning to the country.
    • Imports for charities and certain public organisations.

    While the overall customs policy is governed by federal law, customs administration and collection are managed by the individual Emirate’s customs departments, such as Dubai Customs, Abu Dhabi Customs, etc., under the general oversight of the Federal Authority for Identity, Citizenship, Customs, and Ports Security (ICP).

    5. Municipal Taxes

    Municipal taxes are local-level taxes imposed by emirates on residents, property users, and hospitality services. These are not federal taxes but are collected by municipal authorities in each emirate.

    1. Dubai:

    Housing Fees: A municipal tax levied on residential tenants. It is calculated as 5% of the annual rental value, as specified in the tenancy contract. The fee is typically paid monthly and is included as a separate line item on the tenant’s Dubai Electricity and Water Authority (DEWA) bill.

    Market Fees: A similar tax, also at a rate of 5%, that applies to commercial properties.

    2. Abu Dhabi:

    Rental Fees: A fee of 5% of the annual rental value is levied on tenancy contracts. This fee is added to the monthly Abu Dhabi Distribution Company (ADDC) utility bill. It’s crucial to note that these fees apply to expatriate residents, while UAE citizens are typically exempt from this charge on residential contracts.

    6. Personal Income Tax

    Income tax is a tax on salaries, wages, and personal earnings. In most countries, individuals pay income tax directly from their monthly salary or annual income.

    However, the UAE is famous for having no personal income tax. Residents and expatriates do not pay tax on salaries, wages, or investment income (like dividends, rental income, or capital gains). There is also no inheritance tax or wealth tax in the UAE.

    7. Other Fees & Indirect Taxes

    In addition to VAT, Corporate Tax, Excise, and Customs Duties, the UAE also has smaller but important indirect taxes and fees that residents, visitors, and businesses should know about:

    Road Tolls:

    • Dubai (Salik): Introduced in 2007, each time a car passes through a Salik gate, AED 4 is deducted automatically via a prepaid Salik tag. There’s no daily maximum cap.
    • Abu Dhabi (Darb): Introduced in 2021, AED 4 per crossing during peak hours at selected toll gates. Maximum daily cap is around AED 16 per vehicle.

    Stamp Duties and Administrative Fees:

    • These are one-time fees paid to government departments for specific transactions, particularly in the real estate sector.
    • Property Transfer Fees: When a property is bought or sold, a mandatory fee is paid to the relevant Land Department. In Dubai, this fee is 4% of the property’s sale price or market value, typically split between the buyer and the seller. In Abu Dhabi, the fee is 2% of the property’s value. Other emirates have similar charges.
    • Mortgage Registration Fees: In Dubai, a fee of 0.25% of the loan amount is charged for registering a mortgage.

    Note: Keep in mind, tax rates are subject to change. Contact experts at Shuraa Tax for up-to-date information.

    Stay Compliant, Stay Stress-Free with Shuraa Tax

    The UAE continues to stand out as one of the world’s most tax-friendly countries. With no personal income tax and low rates on business profits, it’s a great place to live, work, and build a business. But at the same time, there are now a few taxes like VAT, Corporate Tax, Excise Tax, and municipal fees that both individuals and companies need to understand.

    For business owners, keeping up with tax rules and filing everything correctly can feel tricky. That’s where Shuraa Tax can help. From corporate tax and VAT registration to excise tax, accounting & bookkeeping, payroll, and tax residency certificates, our experts handle it all so you can focus on running your business with peace of mind.

    If you want expert help and a smooth, hassle-free way to handle your taxes in the UAE, just reach out to Shuraa Tax today.

    📞 Call: +(971) 44081900
    💬 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

  • How to File VAT Returns in UAE?

    How to File VAT Returns in UAE?

    VAT return filing in Dubai or UAE is an essential obligation for businesses operating in the United Arab Emirates (UAE). As a progressive and modern country, the UAE has implemented a tax system that aligns with international standards. Therefore, the UAE introduced its tax system to diversify its revenue streams and support its economic growth.

    If your business is registered for VAT with the Federal Tax Authority (FTA), you need to file VAT returns regularly. This means reporting the VAT you’ve collected from your sales and the VAT you’ve paid on your purchases. Knowing how to file VAT in the UAE correctly is essential for staying compliant with the tax regulations.

    Currently, the authorities have set the VAT registration threshold at AED 375,000 per annum. Failure to file tax returns or comply with the country’s tax laws may result in penalties and fines. That’s why understanding the VAT filing process is crucial for businesses in the UAE.

    What is a VAT Return in the UAE?

    A VAT return in the UAE is a report that businesses submit to the government to show the amount of Value Added Tax (VAT) collected from customers and the amount of VAT paid to suppliers during a specific period.

    Think of it like this:

    • When a business sells something, it adds VAT and collects that money from customers — this is called output VAT.
    • When the same business buys goods or services for its operations, it also pays VAT — this is called input VAT.

    At the end of every tax period (usually every 3 months or sometimes every month), businesses must send a VAT return to the Federal Tax Authority (FTA) using the EMARATAX online system.

    The VAT return helps the FTA know:

    • How much VAT the business collected (from sales)
    • How much VAT the business paid (on purchases)
    • Whether the business needs to pay the difference or can get a refund

    The official form used for this in the UAE is called VAT 201. It includes:

    1. VAT on Sales – Total VAT collected from customers
    2. VAT on Purchases – Total VAT paid to suppliers
    3. Net VAT – The difference between what was collected and what was paid

    Example:

    If a company collects AED 10,000 in VAT from customers but pays AED 7,000 in VAT on purchases, it needs to pay AED 3,000 to the FTA.

    If it paid more VAT than it collected, it might get a refund or use the extra amount in the next return.

    Filing VAT returns on time is essential — it’s not just a legal requirement, but also helps businesses stay transparent and avoid fines.

    Who Needs to File VAT Returns in the UAE?

    Any business or individual registered for VAT in the UAE is required to file VAT returns. This includes:

    • Businesses with an annual turnover exceeding the mandatory VAT registration threshold of AED 375,000.
    • Voluntarily registered businesses with a turnover above AED 187,500.

    Frequency of Filing VAT Returns

    • Quarterly: Most businesses file VAT returns every quarter, covering three months of transactions.
    • Monthly: Larger businesses with a high turnover may need to file VAT returns monthly.

    Important VAT Return Filing Dates in the UAE

    If your business is registered for VAT in the UAE, you need to file VAT returns on time to avoid penalties. The Federal Tax Authority (FTA) gives each business a tax period – this is either every month or every three months (quarterly), depending on your business’s annual earnings.

    Quarterly VAT Filing (Turnover below AED 150 million)

    If your business makes less than AED 150 million per year, you’ll likely file VAT returns every quarter. Here’s when your returns are due:

    • Q1 (Jan – Mar): File by 28th April 2026
    • Q2 (Apr – Jun): File by 28th July 2026
    • Q3 (Jul – Sep): File by 28th October 2026
    • Q4 (Oct – Dec): File by 28th January 2027

    Monthly VAT Filing (Turnover above AED 150 million)

    If your business earns more than AED 150 million per year, you need to file VAT every month. The deadline is the 28th of the following month.

    For example:

    • The return for May 2024 must be filed by 28th June 2024.

    Important Note:

    The FTA may assign a different tax period to some businesses depending on their situation. So it’s always a good idea to double-check your business’s assigned tax period in your FTA account.

    What You Need to File the VAT 201 Return Form in the UAE

    If your business is registered for VAT, you must submit your VAT 201 return online through the FTA portal. The process is manual – you’ll need to enter all figures related to your business’s purchases, sales, and VAT amounts.

    The VAT 201 form is divided into seven key sections. Here’s a breakdown of what each section includes:

    1. Taxpayer Details

    Basic information like your TRN (Tax Registration Number), business name, and contact info.

    2. VAT Return Period

    This includes the start and end dates of the tax period you’re filing for (monthly or quarterly), plus the filing due date.

    3. VAT on Sales and Other Outputs

    Here, you report:

    • VAT is collected on your sales and services
    • Details of standard-rated, zero-rated, and exempt supplies
    • Sales within the UAE and exports

    4. VAT on Expenses and Other Inputs

    This section is for:

    • VAT you’ve paid on business purchases
    • Recoverable input VAT (e.g., on rent, supplies, etc.)

    5. Net VAT Due

    This is the calculation part:

    • If Output VAT > Input VAT, you need to pay the difference
    • If Input VAT > Output VAT, you may be eligible for a refund or carry it forward.

    6. Additional Reporting Requirements

    You’ll provide extra details if needed — for example, reverse charge transactions, import VAT, or any adjustments.

    7. Declaration and Authorised Signatory

    The final section is where you confirm all information is correct and provide the name and details of the person submitting the form.

    Note: Keep all invoices, receipts, and supporting documents ready while filling out the form. It helps ensure accuracy and avoids issues during audits.

    Pre-requisites for Filing VAT Returns in the UAE

    Before you can file your VAT returns in the UAE, there are a few essential steps to ensure you’re ready. Here’s what you need:

    1. VAT Registration with the Federal Tax Authority (FTA)

    To file VAT returns, your business must first be registered for VAT with the FTA. This involves obtaining a Tax Registration Number (TRN), which serves as your business’s unique VAT identification. Without this, you cannot file VAT returns or fulfil your tax obligations.

    2. Accurate Record-Keeping

    Maintaining accurate and up-to-date records of your business transactions is essential. These include:

    • Sales Records: Details of taxable and exempt sales.
    • Purchase Records: Invoices for expenses that include input VAT.
    • Expense Records: Any additional costs related to your business operations.

    These records are the foundation for calculating VAT owed or refundable and must be retained for at least five years for audit purposes.

    3. Access to the FTA e-Services Portal

    The FTA e-Services portal is the official platform for submitting VAT returns in the UAE. To use it, you’ll need:

    How To File VAT Return in UAE?

    VAT return filing in Dubai or UAE is a straightforward process when you follow these steps:

    Step 1: Log in to the FTA e-Services Portal

    Visit the official FTA e-Services portal. Enter your Tax Registration Number (TRN) and password to access your account.

    Step 2: Navigate to the VAT Returns Section

    Once logged in, go to the “VAT Returns” section on the dashboard. Select the VAT return form (VAT 201) for the relevant tax period.

    Step 3: Fill in the VAT Return Form

    The VAT return form is divided into sections where you need to provide the following information:

    Taxable Sales and Output Tax:

    • Enter the total value of your taxable supplies (sales) and the VAT collected from customers.
    • Provide details for standard-rated supplies within the UAE and exports.

    Purchases and Input Tax:

    • Enter the total value of your taxable purchases and the VAT paid on them.
    • Ensure this includes expenses eligible for VAT recovery.

    Net VAT Amount:

    The system will calculate the difference between output tax and input tax to determine the VAT payable or refundable.

    Step 4: Review the Form

    Double-check all the details for accuracy. Ensure there are no discrepancies between your records and the information entered.

    Step 5: Submit the VAT Return

    Click on “Submit” to file your VAT return. Once submitted, you will receive a confirmation message from the FTA.

    Step 6: Make the Payment (If Applicable)

    If your VAT return shows a payable amount, proceed to make the payment through the FTA portal. Payment can be made via:

    • E-Dirham or credit card.
    • Bank transfer using the provided GIBAN (Generated International Bank Account Number).

    Step 7: Retain a Copy for Records

    Save a copy of the filed VAT return and payment receipt for your records. These may be required during audits or for future reference.

    File your VAT return before the deadline to avoid penalties. If you notice errors after submission, you can correct them by filing a Voluntary Disclosure through the FTA portal.

    VAT Returns in UAE Contents

    The following two sections are in a VAT return in the UAE: –

    The first section is the central section, which includes the taxpayer’s details, sales, purchases, and net VAT due. Moreover, the central section is mandatory for all VAT-registered businesses in the UAE.

    The second section is the additional reporting requirements section, which only applies to certain businesses under specific conditions. Furthermore, this section includes fields related to the profit margin scheme.

    Main

    When you file VAT returns in the UAE, the central section contains all the necessary details pre-populated with the taxpayer’s data, including the tax year-end VAT stagger, tax form filing type, and submission date. In a UAE VAT return, the section that captures the taxpayer’s information is called Taxable Person Details.

    This section includes the Tax Registration Number (TRN), the name of the business in both English and Arabic, and the registered address or place of residence of the company.

    VAT on Sales and all other Outputs

    The VAT on Sales and all other Outputs section of the VAT return should contain details of all sales and supplies made by the taxpayer during the tax period.

    • The first column is for the total sales transaction amount which includes sum of sales value due to debit or credit notes. The second value is the VAT amount that has been collected, which also consists of any changes to the VAT collected due to changes in the taxable value captured in the previous column.
    • Finally, the third value shows any adjustments made to output tax or VAT collected during the earlier tax period.

    VAT on Expenses and all other Inputs

    This series of sections presents information on all VAT on purchases and expenses made during the tax period.

    • The total taxable business purchase amount is based on purchase invoices, which include any adjustments due to debit or credit notes from suppliers or corrections from previous tax periods.
    • The Recoverable VAT Amount, or the number of VAT refunds that can be claimed according to VAT law.
    • Any adjustments made to the input tax (VAT paid on purchases).

    Net VAT Due

    Calculating the net VAT due is crucial in determining the amount of VAT a taxpayer owes to the government. To calculate the net VAT due, the total recoverable VAT is subtracted from the total output VAT payable. Furthermore, if the output VAT payable is higher than the recoverable VAT, the difference is the net VAT due, and you will need to make a payment to the government.

    The government may refund or carry forward a VAT credit to future VAT periods if their recoverable VAT is higher than the output VAT payable. This section helps to ensure that businesses accurately report and pay their VAT obligations in accordance with the law.

    Additional Reporting Requirements

    To comply with tax regulations, businesses that sell secondhand goods and have enrolled in the profit margin scheme must complete this section. They need to select “yes” to indicate their enrollment under the scheme, which applies VAT only to the profit made during sales of secondhand products.

    How to Correct Errors in VAT Returns in the UAE

    Mistakes in VAT returns can happen, but it’s important to correct them promptly to avoid penalties and stay compliant with the UAE tax system. The Federal Tax Authority (FTA) allows businesses to correct errors through a process called Voluntary Disclosure. Here’s how you can do it:

    1. Log in to the FTA e-Services Portal

    Use your Tax Registration Number (TRN) and password to log in to your account. Once logged in, go to the “VAT” section and select the “Voluntary Disclosure” option.

    2. Select the Relevant VAT Return

    Choose the VAT return period where the error occurred.

    3. Explain the Error

    Clearly describe the mistake, including the nature of the error (whether it’s related to sales, purchases, input tax, output tax, etc.). Specify the correct figures and how the error occurred.

    4. Submit the Voluntary Disclosure

    Review the information and submit the disclosure. The FTA will assess the correction and may require additional documentation or clarification.

    5. Pay Any Additional VAT

    If the correction results in more VAT being owed, ensure that the payment is made promptly to avoid further penalties.

    Situations Where Corrections Are Necessary

    You must file a voluntary disclosure if any of the following situations occur:

    • Incorrect Calculation of VAT Payable or Refundable (e.g., input tax claimed incorrectly, or sales figures misreported)
    • Omissions or Underreporting of Taxable Transactions
    • Incorrect VAT Classification (e.g., zero-rated supplies reported as taxable)
    • Overclaiming Input Tax
    • Late Registration

    You must file a voluntary disclosure within 20 business days from the date you become aware of the error.

    How Shuraa Tax Can Help

    Knowing how to file VAT in the UAE on time is very important for your business in the UAE. It helps you stay compliant with the tax rules, avoids fines, and keeps your business running smoothly. If you miss the deadline or make mistakes, it can lead to penalties that can affect your finances.

    We understand that VAT filing can be tricky, and even minor errors can cause problems. That’s why it’s a good idea to get professional help. Hiring a professional VAT consultant ensures your filings are done correctly and on time, giving you peace of mind and helping you avoid costly mistakes.

    At Shuraa Tax, we offer a complete range of VAT services, from registration and filing to ensuring compliance. Our team of experienced professionals will make the entire process easy and hassle-free. Whether it’s your first VAT return filing in Dubai or you need ongoing assistance, Shuraa Tax is here to help. Get in touch with us today +971 508912062 or info@shuraatax.com to simplify your VAT process and keep your business on track.