12 Feb 2018
Tax returns within the set timeframes
The Federal Tax Authority (FTA) has set up integrated electronic systems to allow Taxable Persons to register, file tax returns and pay their due taxes seamlessly, asserted FTA Director General Khalid Ali Al Bustani.
The system encourages voluntary compliance, Al Bustani said, calling on all businesses registered with the Authority – whose first Tax Period ends on January 31, 2018 – to file their returns for the first Tax Period no later than February 28, 2018. The FTA Director General reiterated the importance of early preparation for submitting tax returns within the set timeframes, reminding registered businesses to submit their tax returns on a monthly or quarterly basis, as determined by the FTA based on their annual revenue, and within the deadlines set in Federal Decree-Law No. (8) of 2017 on Value Added Tax, as well as its Executive Regulation.
Al Bustani noted that the Federal Tax Authority had made some exceptional adjustments to the first tax periods for VAT in order to afford more flexibility to businesses following requests from a large number of businesses subject to VAT, which entered into effect in the UAE on January 1, 2018. These exceptional adjustments included extending Tax Periods from one to three months for some businesses at the beginning of implementation in 2018, with Tax Periods returning to a monthly basis later on.
The first quarterly Tax Period – which was meant to expire by the end of January or February 2018 – was extended, he reminded, by merging it with the following period, making the first Tax Period four months for some businesses and five for others. Meanwhile, businesses whose first Tax Period was three months ending in March 2018 were not included in these 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, Al Bustani said, lauding the UAE’s success in developing a world-class tax system and legislation, with procedures that are simple and easy to implement. stressed that the success of the tax system is a shared responsibility that requires strategic cooperation between the government, the business sectors and the community. The FTA is in constant communication with all business sectors to listen to their concerns and discuss ways to overcome any obstacles they may face, he noted.
According to Federal Decree-Law No. (8) 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 shall 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, showing taxes paid for these goods and services.
The FTA reaffirmed that submissions of Tax Returns shall be done via the e-Services portal on the FTA website: eservices.tax.gov.ae
Tax Returns must include: The value of standard-rated supplies made in the tax period and the output tax charged; the value of zero-rated supplies made in the tax period; the value of exempt supplies made in the tax period; the value of any reverse-charged supplies received in the tax period; the value of expenses incurred in the tax period (if the business in question is looking to recover input tax and the amount of recoverable tax); the total amount of tax due and recoverable input tax for the tax period; and finally, the payable tax (or repayable) for the tax period.
All businesses must retain accounting and business records, the FTA noted, which include the balance sheet, profit and loss account, payroll accounts, fixed assets records and.