How to Prepare VAT Returns in the UAE

If you operate a company in the UAE, VAT compliance isn’t just recommended—it’s necessary. The good news is that you can get a clean VAT return on time without all the stress when you have a clear checklist to follow. In this Sharp Accounting guide, you’ll find the exact procedures to record, calculate your output VAT and input VAT, reconcile variances and submit your return on time via the FTA portal. En route, you’ll also get handy tips to avoid penalties and make VAT audits fail to disrupt your peace.

Why a structured VAT process matters

Since it’s a FTA deadline by tax period, you need to have a process that is repeatable. With a consistent workflow, you’re going to make less mistakes and keep your cash flow in check — no last minute scrambling. Most importantly, you will prepare audit-quality documentation that demonstrates your VAT treatment is correct—invoice by invoice. Get details on Accounting Services in Dubai.

Step 1: Confirm your VAT obligations and deadlines

Before you calculate anything, confirm:

• Your VAT registration number (TRN) and tax period (monthly or quarterly).
• Your filing deadline (normally within 28 days after the end of the tax period).
• Any special schemes that apply, such as reverse charge mechanism on imports or zero-rated supplies (e.g., certain exports, international transport).

Action: Log into the FTA e-Services portal, check your VAT return due date, and note it in your calendar. This creates urgency and sets a clear cut-off for your data.

Step 2: Gather accurate sales data (Output VAT)

You must report taxable supplies at 5% VAT (unless they’re zero-rated or exempt). Therefore, you should:

1. Export sales from your accounting system for the tax period.
2. Separate standard-rated, zero-rated, and exempt sales.
3. Identify domestic sales, exports, and intra-GCC supplies if relevant.
4. Verify that each invoice includes your TRN, the customer’s details, the VAT amount, and the invoice date.

Pro tip: Reconcile your sales report with your bank statements and POS totals. Because timing differences can arise, confirm that the revenue recognized in your books aligns with invoices actually issued. Looking for  a Accounting Services in Ajman?

Step 3: Compile purchase data (Input VAT)

Next, gather all purchase invoices and expense receipts on which you paid VAT. Then:

1. Check that each supplier invoice shows a valid TRN, correct VAT rate, and accurate line items.
2. Split recoverable input VAT from blocked input VAT (e.g., certain entertainment or passenger vehicles may be restricted).
3. Tag expenses linked to mixed-use activities and apply a reasonable input VAT apportionment method where needed.
4. Include import VAT evidenced by customs declarations (or SABER/ICEGATE equivalents for some flows—confirm local import documentation).

Step 4: Handle special cases correctly

Because errors often occur here, treat these carefully:

• Reverse charge mechanism (RCM): For specific cross-border services and imports, you self-account for VAT (both as output and input, subject to recovery rules). Consequently, you must capture box-wise entries in your VAT return for RCM.
• Credit notes and debit notes: Adjust output VAT for returns, discounts, and pricing errors. Always link notes to the original invoice and date them in the correct tax period.
• Bad debt relief: If you meet the FTA criteria after the required time, consider a bad-debt output VAT adjustment.
• Zero-rated vs. exempt: Document the basis. For example, exports may be zero-rated when evidence of shipment exists; certain financial services may be exempt.

Step 5: Reconcile ledgers and supporting documents

Now, tie everything together:

• Match sales ledger totals to your VAT sales summary.
• Reconcile purchase ledger totals to your VAT purchases summary.
• Cross-check stock movements and cost of sales for reasonableness.
• Verify that the VAT control account balances to your draft VAT return.

Because reconciliation exposes outliers, review any rounding differences, duplicate invoices, or missing TRNs before you proceed. Get details on Accounting Services in Sharjah.

Step 6: Calculate the VAT payable or refundable

Use a simple formula:

VAT payable = Output VAT – Recoverable Input VAT

In case of a negative result, you take forward the VAT credit at request for refund according to your circumstances and FTA procedures. Also, you must ensure that your reverse charge entries are netted properly and any blocked input VAT is still not recoverable.

Step 7: Complete the UAE VAT return on the FTA portal

When your figures are final:

1. Log in to the FTA e-Services portal.
2. Open the VAT return form (Form 201).
3. Enter sales by category (standard-rated domestic supplies, zero-rated supplies, exports) and adjustments.
4. Enter purchases and expenses, including RCM and import VAT via customs.
5. Review the net VAT payable or refundable figure.
6. Confirm the declaration and submit.

Because accuracy matters, double-check each box and keep a PDF copy of the submitted return. Looking for a CFO Services in Dubai?

Step 8: Pay on time (or claim refund)

After submission, settle the VAT liability by the deadline shown on your FTA account. You can pay through approved channels (e.g., GIBAN). If you’re due a refund, compile the required documents & submit a refund—request through the portal.

Step 9: Build an audit-ready VAT file

Finally, assemble a digital file for the period that includes:

• Sales invoices, credit notes, and export evidence.
• Purchase invoices, import VAT documents, and apportionment workings.
• Reconciliations, trial balance extracts, and VAT control account reports.
• A short VAT memo explaining special treatments (e.g., reverse charge, zero-rating rationale).

Because auditors ask for proof, a tidy file saves days later. Get details on CFO Services in Ajman.

Practical tips to stay compliant every period

• Automate invoice capture and TRN validation where possible.
• Train team members to code expenses with the right VAT categories.
• Review high-value transactions mid-period; don’t wait until the deadline.
• Monitor FTA updates; rules and guidance evolve.
• Engage a professional like Sharp Accounting for complex—transactions/refund claims.

Common mistakes to avoid

• Treating exempt supplies as zero-rated (or vice versa).
• Missing reverse charge on imported services.
• Claiming blocked input VAT.
• Filing with mismatched ledgers or unverified TRNs.
• Ignoring credit notes issued after period end that relate to the current period.

Because these errors trigger—penalties/rejections, tackle them proactively. Looking for a CFO Services in Sharjah?

Final checklist

• Confirm tax period and deadline on the FTA portal.
• Export sales and categorize: standard-rated, zero-rated, exempt, exports.
• Export purchases and tag recoverable vs. blocked input VAT; include imports.
• Process reverse charge entries and attach supporting documents.
• Post credit/debit notes and match to original invoices.
• Reconcile ledgers, bank, VAT control account.
• Calculate VAT payable or VAT credit.
• Complete Form 201 and submit.
• Pay through approved channels (e.g., GIBAN) or request refund.
• Archive an audit-ready VAT file with all working papers.

Related Articles:

» How to Cancel VAT Registration in the UAE?

» Input VAT and Output VAT in the UAE – What’s the Difference?

» VAT on Construction Services in UAE

» Impact of VAT on Car Sales in the UAE

» Accounting Requirements for Free Zone Companies in the UAE

About Sharp Accounting

Sharp Accounting specializes in UAE VAT compliance, bookkeeping, and tax advisory. Because we combine robust processes with hands-on support, your filings remain clean, timely, and defensible. If you’d like expert eyes on your next VAT cycle, reach out and we’ll help you streamline the entire workflow.