What is Payment of VAT according to UAE VAT Law ?
VAT Payment in UAE refers to payment of tax collected by the VAT registered businesses to the government. From 1st January, 2018 onwards, the businesses registered in UAE VAT are required to charge VAT at 5% on the taxable supply of goods and services. Similarly, when they purchase goods or services from their supplier, they have to pay VAT at 5%.
What is Output VAT under UAE VAT Law ?
Output VAT is the amount which is collected by the taxable person on making taxable sales.
What is Input VAT under UAE VAT Law ?
Input VAT is the amount paid by the taxable person for making the taxable purchase from the supplier. The Input VAT amount paid by the taxable person will be in turn paid to the government by the supplier. As a result, the government gives the benefit of input VAT to the recipient or the buyer and allows him to adjust the Input VAT amount with Output VAT and pay the remaining.
What is the method to Determine VAT Payment in UAE ?
The formula to determine VAT payment in UAE is very simple. All you need to do is calculate your total Output VAT collected during the tax period and total Input VAT which you are eligible to recover. After determining, apply the following formula :
VAT Payment = Output VAT - (minus) Input VAT
Example of VAT Payment,
What happens if Input VAT is more than Output VAT ?
In some situations, the Input VAT might be higher than the Output VAT. In such a situation, it will result in VAT refundable which can be carried forward to the next return period and will be allowed to be utilized against your future VAT liabilities.
How to make VAT Payment Online ?
The VAT payable determined after off-setting the Output VAT with Input VAT needs to be paid through the FTA portal. The Online VAT payment facility will be provided in the FTA portal, wherein the registered businesses can remit the VAT payable.