VAT Accounting in the UAE: An accounting process of a business concern is the VAT section of a company. The UAE tax law requires every taxable person to maintain a record book and requires detailed documentation. Proper documentation helps identify the user tax that needs to be paid on time. This reduces the tax burden. Maintenance of VAT records is mandatory in UAE. Providing the best VAT consultancy services in Dubai and UAE, Fanavi Accounting and Bookkeeping provides all the necessary activities you need to manage in relation to VAT accounting including VAT data, review of tax reports, tax calculation and Filings, VAT documents, etc. are included. Way to
Different types of VAT
There are two types of VAT:-
1. Input VAT
Input VAT is charged on goods purchased or services rendered. If you are a registered buyer with FTA, the amount of VAT will be deducted from your settlement.
2. Output VAT
The Output VAT is charged on the sale of goods and services supplied. It is calculated directly.
The VAT rate in UAE
In the UAE, VAT is charged based on different categories as per the following rates.
Standard category
Automobiles, electronic items, fuel, jewelry, food items, apparel, entertainment services, cosmetics, restaurants and hotels, construction, commercial leases, etc. attract a standard rate of 5% VAT.
Zero category
Export of goods or services, international transport of goods and passengers, supply of special means of transport, supply or import of investment precious metals with 99% purity, residential buildings, buildings used by charitable institutions, Certain educational services, and certain health care. Services attract zero rate VAT.
Exemption category
Financial services, certain residential buildings, vacant land, and local passenger transport are exempted from VAT charging.
VAT registration in Dubai
A company must register for VAT if taxable supplies and imports exceed AED 375,000. If the amount exceeds 187,500 AED, the company can register voluntarily. Finding reliable VAT accounting consultants like us in Dubai can solve all kinds of problems related to your VAT procedure.
Important documents for VAT Accounting
Businesses must submit the following documents to process VAT accounting in the UAE.
Accounts for all supplies and imports of goods and services.
- All Tax Invoices and Alternative Documents related to goods or services Received and Issued.
- All tax credit notices and replacement documents received.
- All tax credit notices and replacement documents were issued.
- Accounts for goods and services purchased and for which input tax has not been deducted.
- Accounts of exported goods and services.
- Accounts of adjustments or corrections made in accounts or tax invoices.
- Tax due after correction or adjustment of error.
- Annual Account Details
- General Ledgers
- Purchase VAT ledgers, and day books.
- Credit and Debit Notes etc
Why do you need proper Accounting for VAT?
VAT in Dubai calls for a proper accounting system to make accounting procedures error-free and accurate. Organized and structured accounting services are required to meet VAT requirements in compliance with UAE law.
A mandatory requirement by law
Proper VAT accounting is mandatory for every taxable business registered with the Federal Tax Authority (FTA).
Ensures easy tax returns.
VAT accounting ensures access to all necessary documents related to tax collection in one place. This can make filing tax returns easier.
Helps make the extension flexible
VAT accounting provides details of the estimated total amount payable as tax. This will help the management to set the budget if they want to grow the business.
Serves as a checklist
VAT accounting acts as a checklist that allows businesses and relevant authorities to check whether all tax-related documents have been submitted or not, as it includes correctly filled and submitted materials. have names.
Reduces the burden of tax audits
Proper accounting and financial statements ensure that the business keeps all the data related to all the transactions carried out by it. This helps the company in future tax audits or inspections by the authorities so that it can be assessed without much burden.
Aware of new schemes related to VAT
VAT accounting can create awareness among companies on how to avail of the benefits issued by the authorities from time to time.
Increases national income growth
VAT accounting is the process of calculating and recording the total amount of taxes paid by a company to the government. Adequate tax collection will surely fill the treasury which will promote national development.
Reduces the risk of fines
The VAT accountings make sure that the company is complying with all the rules and regulations set by the authority. Proper tracking and payment to the FTA minimize the risk of administrative fines from the government.