Embracing web-based returns in the digital age

One of the key components of this new system is the introduction of a Monthly VAT Prefilled Return, allowing taxpayers to file their Value Added Tax (VAT) returns online. A critical requirement for VAT-registered taxpayers is ensuring that their Electronic Fiscal Receipting and Invoicing System (EFRIS) transactions are consistently recorded daily. The return must also be self-created on a daily basis, with a particular emphasis on updating the system for offline transactions once internet connectivity is restored.

Accessing the new web portal has been made user-friendly, with various functionalities available without requiring users to log in, including making payments, obtaining a Tax Identification Number (TIN), filling tax returns, and more. However, for those preferring the traditional method, logging into the URA portal using their TIN, password, and a one-time security code is still an option, with the security code serving as an added layer of authentication to prevent unauthorized access.

The return process involves navigating through different features, such as Tax Computation Summary, Sales, Purchases, Input Tax Allowed, VAT Withholding Credit, Tax Summary, and Return History. Specific attention is given to disallowed VAT on certain expenses, including entertainment expenses, input VAT on entertainment for memberships in clubs, associations, or societies, as well as VAT charged on hotels and accommodation.

Sales are categorized based on the nature of transactions, including Local Exempt, Local Zero Rated, Exports Zero Rated, Local Standard Rated, Government Supplies, Local VAT Deemed, and Out of Scope Supplies. The prefilled values, VAT exclusive, are automatically populated, and additional sales must be entered separately. Failure to include sales that did not pass through EFRIS could result in an inaccurate comparison with audited financial sales for corporation tax.

Purchases are also prefilled and categorized into exempted, zero-rated, and standard-rated purchases. Importantly, only purchases from EFRIS-compliant taxpayers ensure auto-prefilled purchases on the system. Disallowed VAT, as per the VAT Act, includes expenses like entertainment, hotels, and telephone expenses. The web-based VAT filing addresses challenges related to the application of the ACT on telephone bills.

The Tax Summary section provides a comprehensive view of total VAT on sales versus total VAT on purchases, determining the net amount of taxes payable or claimable at the end of the month. The return must be viewed daily to reconcile transactions, and once the month ends, the system restricts access for further viewing.

Additional considerations include VAT on Imported Services, credit memos, VAT withheld, automation and adjustments, EFRIS integration, use of exchange rates, and the method of apportionment. Penalties for late submissions are highlighted, and there is a brief mention of the new web-based Rental Tax Return, separate from business income, effective November 2023.

This transition to a web-based system is anticipated to bring increased efficiency, better time management, minimization of errors, a streamlined refund process, ease in audit procedures, and an overall embrace of technology and digitization. It marks a significant step in URA's commitment to modernizing tax administration for the benefit of taxpayers and the efficiency of the revenue collection process.