VAT Accounting

UAE will soon introduce a new taxation system in the form of VAT, confirmed by the Ministry of Finance, UAE. The nation, till now, does not have any enforced federal income tax regulation for general business but with the implementation of VAT with effect from January 1st, 2018, all goods and services would be charged at a standard rate of 5% exempting basic food items, health, and education. VAT accounting is pivotal vertical which needs certain expertise and we have a team of trained professionals who excel at the task.

Value Added Tax (VAT) is a levy added on to most goods and services. It is collected from customers by vendors and paid over to the Government. Accordingly, a business enterprise will pay VAT on the goods and services it buys (on the purchase price) and collect the VAT from its customer on the goods and services it sells (on the sales price, which might also include the value for any value addition undertaken and profit on the goods before selling). The difference between the amount which the business enterprise has paid and collected is to be paid over to the government. 

Over and above these companies are required to maintain a number of records and information as required by the taxation laws. This will enable you to file the VAT return timely and accurately. Further, this will ensure sufficient documents and records for VAT audit by the Government agencies. VAT rules do not specify the list of accounts or nomenclature of accounts, 

However, it does require to maintain proper records to identify the below which will be required to file the returns:

Your Total Sales identifying:

1. Local sales
2. Export sales and
3. Exempted sales

 Your Total purchases identifying :

1. Local Purchases
2. Import purchases

VAT Accounting Procedures.

VAT is a transaction tax and hence it influences numerous processes within your business. Subsequently, the need for VAT accounting measures and controls arises, these are:

•  Master data of suppliers and customers to the business, knowledge of their place of establishment
•  Inventory masters
•  Tax coding of transactions
•  Sales and purchase schemes of accounting entries
•  General ledger
•  VAT recording and reporting

If there is a lack of ownership, control, or perceptibility covering any of these areas then this may influence the VAT return submission and the financial statements. Where the information are not provided accurately you might be subject to hefty fines and penalties.

Businesses in UAE are expected to put all the possible efforts necessary to be VAT compliant. For the success of this new tax regime, businesses must ensure they fully comply with VAT by upgrading their technology and bookkeeping infrastructure and may also consider hiring a full-time staff that has knowledge of using VAT accounting software. If you are a small business, you may learn using some software tools that help you manage your books and also generate all reports required for filing VAT returns, which you can file on your own.

Our VAT Consultants have substantial experience in undertaking VAT accounting procedure reviews to ensure that companies meet their VAT compliance needs as outlined in UAE. Similarly, other VAT legislation and accounting standards which must also be met. Our website offers you the exclusive range of services that we can provide to your company’s requirement related to VAT accounting and tax compliances. Our accurate review of VAT accounting – measures & delivers Value Addition by finding an efficient method to control the VAT functions within your business where ever possible. We also ensure that the processes and controls meet VAT audit and other applicable requirements.We are here to support you with all your VAT accounting needs.

We also offer accounting services alongside VAT consultancy in the UAE. We partner with you to complete your company’s bookkeeping process and VAT requirements. Additionally, we advise you about valuation, business planning and analysis of possible non-compliances. Apart from our certified accountants, we have the skills, knowledge experience and personality to handle all your accounting and VAT requirements. Being your trusted VAT planner and financial consultant, we are ready to confront any financial challenges that you may experience. We adapt our services to the precise needs of individual companies, to support the proper operation and compliance.