What is VAT return
VAT is an indirect tax levied on the consumption of goods or services at the point of sale. The VAT return is a periodic summary of the total value of supplies or services sold and purchases made by a taxable person during the tax period. It reflects the taxable person's VAT liability.
VAT liability
"The VAT liability for a specific tax period is determined by the variance between the output tax payable (VAT charged on supplies of goods and services) and the input tax (VAT incurred on purchases). If the output tax exceeds the input tax, resulting in a VAT liability, the difference must be remitted to the Federal Tax Authority (FTA). Conversely, if the input tax surpasses the output tax, the taxable person can recover the excess input tax and offset it against future payments owed to the FTA."
When to submit a VAT return
Taxable persons and businesses registered under VAT are obligated to regularly submit VAT returns to the Federal Tax Authority (FTA) at the conclusion of each tax period. Typically, these returns must be electronically filed through the FTA portal (eservices.tax.gov.ae) within 28 days following the end of the tax period. While the tax period duration varies for different businesses, the standard tax period is:
- Quarterly for businesses with an annual turnover below AED 150 million, and
- Monthly for businesses with an annual turnover of AED 150 million or more.