All businesses are mandated to file their VAT returns in UAE which provide all details regarding purchases, sales, output VAT and input VAT that has been paid in a particular timeframe. Output VAT in this case refers to the amount that has been collected on sales while input VAT here is the amount paid to the supplier for expenses/purchases. Eligible input VAT amount will be allowed for adjustment with output VAT amount as well. Post adjustment of the input VAT and output VAT, the result will ultimately create two scenarios.
VAT payable will be the balance to be paid to the FTA in case output VAT amount exceeds input VAT amount. VAT refundable is the excess balance if the output VAT is lower than input VAT paid.
VAT refund treatment as per UAE VAT regulations
- Taxpayer is eligible for requesting a refund of VAT.
- If the taxpayer does not want to request refund of excess input VAT, then the excess recoverable tax will be carried forward towards the subsequent tax periods and may be used for offsetting against taxes payable or penalties. Refunds may be applied for later.
Claiming VAT refunds
If you have excess input VAT, then an option will be provided on the VAT Return for claiming your refund. You have to tick Yes in box number 15 that says Do you wish to request a refund for the above amount of excess recoverable tax. If you tick No, then the excess recoverable tax will be carried towards tax periods that arise subsequently and may be used for offsetting penalties or payable taxes thereafter. Post submission of your VAT returns, you have to complete the refund application for VAT which is Form VAT311.
Here are the key steps for submission of VAT311:
- Login to the FTA e-Services Portal with your password and username.
- For getting the refund form, go to the VAT tab and VAT Refunds tab.
- Click on VAT Refund Request and the form will open where you have to fill up all necessary details. Some fields include total amount of excess refundable tax, TRN, legal name of entity, amount you wish for refund, remaining amount of eligible excess refundable tax and late registration penalty amount.
Rs. 20,000 is applicable if you have been charged the penalty but are yet to be paid the penalty at the time of claiming the refund. If you have not been charged a penalty and have paid the same, the amount will be Zero. If you have not been charged a penalty, then the amount will be Zero. Authorized signatory will be automatically populated and the declaration has to be ticked prior to submission. Post completion of the form, click on Submit. The refund form will then be processed on the basis of the FTA guidelines. You will get the email notification on the application result and post approval of claim, the desired amount will be refunded.
The confirmation email will be generated likewise and the balance can be checked in My Payment. This is where you can check the transaction history. The VAT return 201 should be submitted within the 28th day following the deadline for settlement of the net VAT liability if any. Missing this date may lead to refunds being delayed. If the due date for submission of returns and payment falls on any official holiday or weekend, deadlines will be extended to the first business day coming thereafter.
Delayed submission of VAT Return 201 will lead to penalties of AED 1,000 for the first time and AED 2,000 as penalty for the second time. Delay in settlement of net due VAT will draw penalties of 2% for the first 6 days from the due date and 4% till the 30th day from the due date. This will also be 1% for each day post the lapse of 30 days from the due date till the 300th day or settlement date, whichever comes earlier or is less. For help with your VAT registration in UAE, filing and returns, you can contact GCC Filings. The company will also help you with auditing, accounting, company incorporation and several other vital business processes.