Filing VAT returns accurately is crucial for UAE businesses. Even small errors can lead to penalties and compliance issues. Here are the most common mistakes and how to avoid them.
1. Incorrect Tax Period Selection
One of the most frequent errors is selecting the wrong tax period when filing returns. Ensure you're filing for the correct quarter or month as specified by the FTA based on your registration.
- Quarterly filers must submit within 28 days after the quarter ends
- Monthly filers have 28 days from the end of each month
- Always verify your tax period before starting the return
2. Missing or Invalid TRN Numbers
Every supplier's Tax Registration Number (TRN) must be validated. Invalid or missing TRNs on invoices can lead to rejected input tax claims.
- Verify supplier TRNs using the FTA's TRN verification tool
- Maintain a database of verified supplier TRNs
- Use automated TRN validation in your accounting software
3. Incorrect VAT Calculation
Mathematical errors in VAT calculations are surprisingly common. Ensure your system correctly applies the 5% standard rate and identifies zero-rated and exempt supplies.
- Standard rate: 5% on most goods and services
- Zero-rated: Exports, international transport, certain healthcare and education
- Exempt: Residential property, local transport, bare land
4. Late Filing and Payment
Late submissions result in fixed penalties plus a percentage of unpaid tax. The FTA imposes:
- AED 1,000 for first-time late filing
- AED 2,000 for repeat offenses within 24 months
- 2% of unpaid tax immediately, plus 4% monthly (capped at 300%)
5. Not Reconciling Sales and Purchases
Before filing, reconcile your VAT return figures with your accounting records. Discrepancies between your books and filed returns can trigger FTA audits.
6. Ignoring Reverse Charge Mechanism
For services imported from outside the UAE, businesses must self-account for VAT using the reverse charge mechanism. This is often overlooked.
- Apply to imported services from non-UAE suppliers
- Report both output and input tax in the same return
- Ensure proper documentation is maintained
7. Poor Record Keeping
The FTA requires businesses to maintain records for at least 5 years. Poor documentation can result in denied input tax claims during audits.
How TaxSey Prevents These Mistakes
TaxSey's automated VAT compliance platform eliminates common filing errors by:
- Automatic TRN validation for all suppliers
- Real-time VAT calculations with proper rate classification
- Deadline reminders and automated filing
- Built-in reconciliation checks
- Secure document storage for 5+ years