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The second critical aspect of business compliance in the UAE is the Value Added Tax. In 2018, VAT was introduced, and it has become crucial for all businesses to implement in Abu Dhabi. Maintaining proper VAT filing ensures that your business is never penalised and stays well-compliant. If you're an entrepreneur, VAT obligations seem to be a daunting process, but with a proper checklist, it becomes a simpler process. Here is the ultimate checklist to guide you through VAT filing in Abu Dhabi.
Registration for VAT with the FTA
Before you start filing, ensure that your business is registered for VAT with the UAE Federal Tax Authority. You must register if
Your business has a taxable turnover of AED 375,000 or more. You are required to register.
Your annual turnover is between AED 187,500 and AED 375,000. You can voluntarily register.
Keep Accurate Records of All Transactions
Record-keeping is essential for proper VAT filing in Abu Dhabi. You should keep a record of all transactions, including the following:
Sales Invoices (output tax)
Purchase Invoices (input tax)
Expense Records
Credit and Debit Notes
Import and Export Records
Calculate Output VAT and Input VAT
When filing your VAT, compute the amount of VAT you collected from sales or output VAT and the VAT paid on purchases or input VAT. In the UAE, VAT applies to taxable goods and services at a standard rate of 5%.
Output VAT: The VAT collected from the customer when selling goods or services.
Input VAT: The VAT paid to suppliers for buying goods or services.
Action Step: Determine the net VAT by deducting input VAT from output VAT. What you pay or are owed is the difference.
For example:
Output VAT = AED 20,000
Input VAT = AED 5,000
Net VAT Payable = AED 15,000
Adhere to Invoice Format
Your VAT invoices shall be issued according to the FTA standards. An invoice must have the following;
Business name and address, along with a TRN number
The invoice date and the serial number for the invoice
Customer name along with the address
Description of goods or services
Amount before VAT, VAT amount, and the total amount payable
Submit Your VAT Return on Time
VAT returns in Abu Dhabi are to be submitted quarterly or as required by the FTA. The submission date is usually 28 days after the end of each tax period. Failure to meet this deadline can attract a hefty fine.
Action Step: Log into the FTA portal, fill out the VAT return form (Form 201), and submit it along with the calculated VAT.
Checklist for Filing:
Verify that the VAT calculation is correct.
Update all records.
Pay any outstanding VAT before the deadline.
Pay Your VAT Liability
After submitting your VAT return, ensure you pay any VAT due by the deadline. You can make payments on the FTA portal by online banking, e-Dirham, or other modes of payment.
Prepare for VAT Audits
The FTA conducts random VAT audits to ensure compliance. Be prepared by:
Keeping records for at least 5 years.
Ensuring documents are readily available.
Reconciling your VAT returns with financial records.
Conclusion
VAT compliance would be not just a legally mandated but also a measure of a well-managed business. Follow this checklist and get experts at your side, such as Free Bird, and you can rest assured of error-free VAT filing in Abu Dhabi or at least be able to avoid unnecessary penalties. So, let Free Bird help with your VAT needs; then, you can focus on what you do best--growing your business.