Value Added Tax commonly known as Value Added Tax was introduced in UAE on January 1st 2018, which instructed all the business entities to comply with the requirements of the new Value Added Tax Law. Filing of tax returns to the FTA (Federal Tax Authority) is one of such requirements which is to be followed by the company registered under the Value Added Tax Law. Hence, the company must be vigilant while filing the return because a minor error may result to huge penalties and fines.
VAT system is based on the consumption of goods and services in UAE. It was introduced to compensate the decreasing revenue from the Oil Industries and which was reinvested to develop the infrastructure. The entities or sellers registered under the Value Added Tax law collects the Value Added Tax on behalf of the authority at the point of sale and then makes the payment to the authority within the specified period of time. When the entity makes the payments, it has to file VAT return with the Federal Tax Authority in order to confirm the tax payments.
