Value added tax in UAE (VAT) was introduced on January 1, 2018. Since then, businesses must register for VAT, charge VAT on goods and services sold and comply with VAT filing in Dubai each quarter / month. While VAT has been successfully implemented here in the UAE, businesses still face challenges when filing their returns – this article discusses these challenges in greater depth.

Common Challenges faced when filing VAT returns

Common Challenges faced when filing VAT returns

  • Complexity of VAT regulations:  VAT regulations in the UAE can be complex and challenging to understand for smaller and mid-sized businesses, making it hard to meet all their VAT obligations and submit accurate VAT returns on time. This may make filing accurate VAT returns difficult.
  • Poor recordkeeping: The FTA makes it mandatory for all the registered businesses to maintain proper records of every transaction for at least past five years. To file accurate VAT returns, businesses need to maintain meticulous and up-to-date records of their transactions. Failing to do this could result in errors being filed and penalties or fines being assessed against businesses for failing to do so.
  • Calculation Errors: VAT returns require businesses to accurately calculate how much VAT is owed or due; calculation errors could result in incorrect VAT returns that lead to penalties and fines.
  • Mistakes related to reverse charge mechanism transactions: Reverse charge is applicable where the firm imports goods and services to UAE. Usually there are inaccuracies in transactions involving reverse charge mechanisms. Businesses forget to include transactions covered by the reverse charge mechanism in VAT returns.
  • Late or missed VAT returns: Businesses in the UAE are required to submit VAT returns regularly – typically quarterly – and any delays can incur penalties and fines.
  • Lack of Knowledge and Experience: Many UAE businesses may lack the required knowledge and experience to understand VAT regulations and file accurate VAT returns, leading to errors and penalties as a result.
  • Changes in VAT regulations: VAT laws in the UAE keep changing very often, making it challenging for businesses to keep up with their obligations and file accurate VAT returns.

To overcome these challenges, businesses in the UAE should ensure they have an in-depth knowledge of VAT regulations and obligations while keeping accurate records and seeking professional help from accounting firms that specialize in VAT returns filing. Furthermore, businesses should stay abreast of changes in VAT regulations in order to comply with the law.


VAT is an integral part of any business operation in the UAE. It is crucial to understand and implement VAT regulations so as to avoid any legal complications & penalties. The common challenges faced by businesses can be mitigated with the help of professional accounting firms such as M&M AL Menhali Auditing in UAE. Their expertise and experience in the field of VAT compliance and accounting can assist businesses in navigating through the complex system of VAT process. It is important to seek their guidance and support to ensure that your business complies with the VAT regulations and stays on the right side of the law. M&M Al Menhali Auditing’s services related to VAT include VAT Registration in Dubai UAE, VAT Filing in Dubai UAE, VAT review in Dubai UAE,