VAT-compliant accounting services in the UAE
Since 2018, Value Added Tax (VAT) has been applied to all taxable persons and businesses. The VAT law requires exempt or non-exempt entities to keep accounting records for at least 5 years. A company’s VAT-compliant books and records are used as evidence during FTA audits. BestaxCA has a team of certified tax experts in Dubai who provide the best assistance to national and international clients. We proficiently handle your accounting records and financial transactions in compliance with VAT laws. On this page, we will take a detailed look at VAT accounting in the UAE.
What is VAT accounting and bookkeeping?
VAT accounting is the most important aspect of tax compliance in the United Arab Emirates. VAT accounting and bookkeeping include financial records and appropriate documentation relating to value-added tax. It includes in-depth reporting on the calculation of tax, filing of VAT returns, and collection and payment of VAT when due. The company should choose the best accounting software in the UAE that accurately produces balance sheets, general ledgers, invoices, credit and debit notes, etc. In addition, each company must keep separate records of the VAT collected on purchases and the VAT paid.
The objective of VAT-compliant accounting in the UAE
Accurate and up-to-date books of account are a statutory requirement for every taxpayer in the UAE. The main objective of this regulation is to ensure compliance by all small or medium-sized enterprises operating in the UAE. The correct implementation of this VAT distributes the amount of tax fairly among all businesses. VAT-compliant accounting allows businesses to file VAT returns or claim VAT refunds from the regulatory authorities. In addition, it will help during FTA investigations and protect you from penalties for VAT non-compliance.
Types of value-added tax
There are two different types of value-added tax in the United Arab Emirates. An understanding of the two types is provided below:
- Input tax
Input tax is levied by an individual or a company that is a registered taxpayer. It is charged when goods are purchased or services are rendered to a customer. A registered business may deduct the amount of tax from its payments.
2-Output VAT
The output VAT is charged directly on the sale of goods or supply of services by an undertaking. These transactions are automatically calculated and a comprehensive VAT report is generated by the state-of-the-art VAT accounting software AAE.
Important documents for VAT accounting
A tax-registered company in the UAE must prepare and keep appropriate documentation. This documentation is checked by FTA auditors to calculate tax and implement VAT. The following documents must be submitted to the UAE for VAT accounting.
1-Accounting for all goods and services supplied or imported
2-All tax invoices and other documents
3-Tax credit and debit notes received and issued
4-Accounts of goods and services purchased for which no input tax has been deducted.
5-Accounting of exported goods and services
6-Report of the amount of tax payable after adjustment
7-General and VAT ledgers
8-Purchase of diaries
9-Penalties for failure to keep correct accounts
Taxpayers who fail to keep the records required by UAE tax law for at least five years are liable to VAT penalties. The fine for failure to keep accounts is AED 10 000 for the first offense and AED 50 000 for a repeat offense. All taxpayers must therefore comply with the VAT requirements for keeping books and records in the UAE. Our VAT consultants in Dubai offer all types of VAT services in accordance with FTA standards and do everything possible to avoid VAT fines and penalties.
Benefits of VAT-compliant accounting
VAT-compliant accounting and bookkeeping offer many advantages to individuals or businesses. These include:
- Ensuring VAT compliance
VAT-compliant accounting and bookkeeping ensure that the company is then compliant with the UAE tax procedural laws. It provides a checklist that VAT is accurately entered in incoming and outgoing taxes, invoices, and debit and credit notes as required by the FTA. Company accounting records are the strongest proof of your compliance with VAT regulations in the United Arab Emirates.
- Facilitating tax audits
VAT accounting reduces the burden of tax audits by the Federal Tax Authority. Proper financial records are a great help during FTA accounting inspections. VAT-compliant accounting confirms to the controlling authorities that the company is already collecting and paying VAT. Through this database, management can obtain all accurate tax-related information.
- Avoids VAT penalties
VAT-compliant books and records ensure that the taxable entity complies with all UAE tax procedural laws. It verifies that the entity complies with the rules set by the relevant authorities in the UAE. Proper tracking of financial transactions can reduce the risk of government administrative penalties for VAT.
- Contributes to the Emirati economy
Value-added tax contributes to government revenue, which ultimately stimulates the economy. This is only possible if the company accurately calculates the tax on behalf of the government. The purpose of VAT accounting is to calculate and record the tax payments that the company will have to make to the government. Accurate VAT accounting has a positive impact on the overall Emirati economy.
Why choose us for VAT accounting services?
BestaxCA is a licensed accounting and financial advisory firm in Dubai that provides exclusive VAT services to both UAE residents and non-residents. Our team of experts assists you throughout the VAT compliance process in accordance with tax laws and regulations. By tailoring cost-effective accounting solutions for individuals and businesses, we earn the trust of our clients. We are competent in providing VAT-compliant accounting and bookkeeping services in UAE. Our VAT consultants will focus on the following areas when providing VAT accounting services in the UAE. For example:
- Value-added tax planning
- Review of VAT-related records and transactions
- Updating VAT records to avoid penalties
- Introducing new VAT rules and regulations
- Registering a business to ensure VAT compliance
- Install accounting software
- Advice on filing VAT returns
- Prepare balance sheet and accounting records
- Suggest a VAT solution within the existing system
- Advice on VAT rates and calculations
If you still have doubts about our VAT-compliant accounting services. You are welcome to contact our tax experts in Dubai, United Arab Emirates.