Doing a VAT return involves recording sales/purchases, calculating the net VAT owed (output minus input), and submitting it via MTD-compatible software or your online portal. The deadline is typically one month and seven days after the period ends, requiring accurate reconciliation of all transactions.
How do I file a VAT return in the UAE?
Navigating VAT obligations can be particularly complex for online businesses, especially those selling across borders. Common mistakes—such as failing to register in the correct countries, applying the wrong VAT rates, or missing important filing deadlines—can lead to serious financial and legal consequences.
Calculating the VAT Amount
For a purchase price of x, we multiply x by 15%. But recall that 15% means 15 per 100 or 15/100. So the VAT amount on x is simply x multiplied by 15/100 = (x)(15/100). This means that there is VAT payable of R7 on a purchase price of R50.
VAT returns are filed using BIR Form 2550M (Monthly VAT Declaration) and BIR Form 2550Q (Quarterly VAT Return). The monthly VAT return is due on the 20th day of the following month, while the quarterly return is due on the 25th day after the quarter's end.
How difficult is it to complete a VAT Return? If your business is relatively simple, you may well find that you're able to complete your VAT return each quarter without any help.
A business must register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Unless you're using the flat rate scheme, you can calculate your VAT return by following the steps below:
VAT is commonly expressed as a percentage of the total cost of a good or service. For example, if a product costs $100 and there is a 15% VAT, the consumer pays $115 to the merchant.
Keeping VAT records
Types of VAT
Like most business people, you probably know that there is a turnover threshold for VAT. Currently, that level is £90,000 and if your VAT taxable turnover goes over this level, you must register for VAT.
The purpose of a VAT return is to calculate the difference between the VAT collected from customers and the VAT paid to suppliers. If a business has collected more VAT than it has paid, it must pay the difference to HMRC. Conversely, if it has paid more VAT than it has collected, it can reclaim the difference.
Step-by-Step Guide to File VAT Return Online
The VAT you pay when you buy goods and services is called 'input tax'. If the output tax exceeds the input tax on your VAT return you will have to pay the difference to HMRC. If the input tax is the higher number then you will be due a repayment from HMRC.
Americans do not pay VAT in the United States because the U.S. doesn't have a value added tax. However, Americans pay VAT when traveling in countries with a value added tax.
Here, we explore the most common VAT mistakes business owners make and how to avoid them.
Visit the iTax online portal using https://itax.kra.go.ke/KRA-Portal/ Login to iTax portal with PIN and password. Click on 'e-Returns' or select 'Returns' from the navigation menu and click on 'File Returns' Select the Type, enter your taxpayer's PIN and select the Tax obligation as 'VAT' and Click 'Next'
HMRC will record a 'default' on your account if you're late with your VAT Return or payment. Getting a default may put you in a 'surcharge period' of 12 months. If you get another default during the 12-month period, you may have to pay an extra amount (a 'surcharge') on top of the VAT you owe.
Value-added tax
You must register your business for VAT if the total value of your goods and services in any consecutive 12-month period exceeds or is likely to exceed R1 million.
Can You Submit a VAT Return Without an Accountant? Yes, you can submit a VAT return without the help of an accountant. The process has been made more accessible with Making Tax Digital (MTD), which requires VAT-registered businesses to use MTD-compatible software like Xero or QuickBooks to file online.