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Member Articles

‘Error’ In Uae Vat Return – Is It

Still Technically Valid?

CA Mradul Kant Gupta under ‘VAT Amount’ section of Box 1 – this would
lead to VAT value not equal to 5% - therefore EM.

3) Total purchase value of goods is to be reported
under ‘Amount’ section of Box 9 which will be sold
“Federal Tax Authority (‘FTA’) released VAT Return under PMS. Since, VAT paid on purchase will not be
User Guide in 2018. This guide clarifies finer nuances available as ‘Input VAT’ in this case as goods would be
of contents of return. It therefore enables registrants to further sold under PMS, corresponding ‘VAT Amount’
correctly determine specific disclosure to be made in section will have NIL value - therefore EM. 4)
return in respect of any type of transaction undertaken Importing goods from outside UAE to UAE leads to auto
by them during the tax periods. Following the guidance population of import VAT at standard rate of 5% under
provided under said guide, at times, it does lead to a Box 6 of return. Suppose, if imported goods bear VAT
situation wherein return prepared and submitted is rate of zero percent, such goods would still be auto
done so albeit with error message (EM) being displayed populated at standard rate under Box 6. In order to
– EM being VAT value is not equal to 5% of net value. rectify VAT rate, if a view is taken to adjust VAT value
Few technical instances only, in negative, under Box 7 with no corresponding
where EM is likely to occur in spite of following value in ‘Amount’ section, it will lead to EM.
disclosure guidelines are below: It seems the concept to display EM was possibly with
1) Reporting of supplies under RCM subject to VAT at an intention to keep check or highlight any possible
zero rate in Box 3 of return – since supplies are zero error in return (through 5% check). However, basis
rated, disclosure in corresponding VAT value of Box above instances, it is evident that a return may still
3 will not appear - therefore EM. be filed (and accepted by FTA) with EM after making
correct disclosures and following guidelines provided
2) Where sale of goods is made under Profit Margin under Return User Guide. It therefore appears that the
Scheme (PMS), full value of goods less VAT value overall objective of EM is to test/assess the arithmetical
calculated on margin earned are required to be accuracy of return to the extent possible – A VAT return
disclosed under ‘Amount’ section of Box 1 and VAT submitted with aforesaid types of error may still be a
calculated on margin only is required to be disclosed
technically valid one!”

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