UAE registered businesses must file quarterly VAT returns and pay any VAT due to the FTA. Here is a step-by-step guide to calculating your UAE VAT return.
UAE VAT Return: Key Concepts
Output VAT: VAT you collected from your customers on your sales (5% of taxable supply value). Input VAT: VAT you paid to your suppliers on your business purchases (5% of taxable purchase value). VAT Payable = Output VAT − Input VAT: If Output VAT > Input VAT: you owe this difference to the FTA. If Input VAT > Output VAT: you can claim a refund from the FTA (or carry forward the credit). Zero-rated supplies: Taxable at 0% — still reportable on the VAT return. Includes exports and international services. Input VAT on zero-rated supplies is still recoverable. Exempt supplies: Not taxable — do not appear in Output VAT. Input VAT on exempt supplies is NOT recoverable. Includes: residential rental, financial services, local passenger transport.
UAE VAT Return Calculation Example
Period: Q1 (January–March 2025). Sales (taxable at 5%): AED 500,000. Output VAT collected = AED 500,000 × 5% = AED 25,000. Zero-rated exports: AED 100,000. Output VAT = AED 0 (zero-rated). Purchases (taxable): AED 200,000. Input VAT paid = AED 200,000 × 5% = AED 10,000. Office rent (exempt): AED 50,000. Input VAT on exempt = not recoverable. VAT Payable = AED 25,000 − AED 10,000 = AED 15,000. Payment due: within 28 days of the end of the tax period (Q1 return due 28 April 2025).
Common UAE VAT Return Mistakes
1. Claiming input VAT on non-business expenses (personal meals, entertainment). 2. Not reporting zero-rated supplies. 3. Missing the 28-day filing deadline (AED 1,000 late filing fine, AED 2,000 for second offence within 12 months). 4. Incorrect FX rate used for foreign currency invoices (must use CBUAE rate on transaction date). 5. Not retaining tax invoices to support input VAT claims (FTA can request audit of invoices).