All About VAT Payments in UAE
All tax registered businesses or individuals are required to file VAT returns on a monthly or quarterly basis. For this, they can approach any registered VAT services firm in UAE for expert guidance. The total VAT payable depends on whether the Input VAT you incurred can offset the Output VAT. If the Output VAT exceeds Input VAT, then the difference is payable and is refundable if the Input VAT is greater than the Output Vat.
If in a payable position, the person is supposed to make the payment before the 28th of the VAT filing month. There are different ways that a person can make the payment:
Different Ways of VAT Payment:
- E Dirham: Transaction fee of AED 3, If paying through master or visa card 2-3% on the payable amount.
- E Debit: You can make payment directly to the FTA account using your retail or corporate bank account and the transaction fee is AED 10. This option is only available with some banks
- International Bank Transfer: If you are outside the UAE and your bank is a member of SWIFT, then this option is available.
Apart from the above-said methods, a new method was introduced by FTA which is the outcome of a well-planned business partnership with FTA and the Central bank of UAE. A GIBAN [Generated International Bank Account Number] which is similar to IBAN can be used to make payments. It is made possible with the help of the UAE Fund Transfer System. A GIBAN is unique to each registered business or person which can be availed from the FTA Portal. This method is currently popular because of its merits and availability. This method of transfer is available in over 77 Banks and other exchange offices and financial firms.
Merits of the new systems is that:
- Quick and easy procedures
- Can make the payment even from outside UAE
- Reduce dependence on cash which also helps in reducing the spread of COVID-19 by avoiding transferring physical cash through persons.
With all these methods, it helps the Business and taxpayer to pay off the liability before the deadline and in turn avoid penalties. A partial payment will settle the oldest tax liability and then the recent ones. Late payment would lead you to some penalties, as mentioned below:
- Once you fail to make the payment of payable tax, 2% of the unpaid tax would be imposed promptly.
- 4% will be due on the seventh day of the tax amount which is yet unpaid following the deadline for payment.
- If any amount is still unpaid, 1% daily penalty charges would apply to that.
Taxpayers who file VAT returns consistently will be needed to submit two separate VAT returns for the VAT filing period, instead of a single combined VAT return covering a two-month tax period, in accordance with comparative measures as of late fee declared by the FTA corresponding to VAT Tax returns. Until now, there is no sign that further expansions will be allowed for future tax periods, thus organizations should inspect any further advancements intently. If you have any queries regarding the VAT payment, feel free to get in touch with us as we are a renowned VAT consultant in UAE.
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