VAT Accounting and Documentation
UAE witnessed a massive change in its economy commencing from January 1st, 2018, with the introduction of VAT. Months have passed since VAT got implemented, but the uncertainty about accounting procedures continues.
VAT accounting requires companies to maintain separate records, for the VAT you pay and charge. The VAT law mandates every taxable person to maintain books of accounts, which needs to be kept for a minimum of five years.
With regard to companies operating in UAE, the partners and shareholders are supposed to ensure that the books of accounts comply with the provisions of VAT law. It is also advisable to maintain an electronic copy of the original documents. The FTA might demand additional documents anytime. This includes:
Yearly accounts details
Invoices issued and received
Purchase day books
Debit and credit notes
Supplies and imports records
For purchases made outside UAE and imported to the country, reverse charges are applicable. In reverse charge mechanism, it is the buyer who have to pay VAT to government and not the seller. This ensures that there isn’t any sort of tax evasion on goods or services.
Maintaining records in an accurate and timely manner will enable smooth VAT return process. Approaching a consulting agency that can manage the entire VAT accounting process professionally, is the most viable option. Along with assisting with the procedure, they can also introduce you to VAT accounting software, that enables you to send invoices, restore bank transactions, take care of expenses, track inventory and create reports.
Our VAT Consultants at Aon have substantial expertise when it comes to VAT accounting. The assessments ensure that companies fulfill their VAT compliance requirements according to the regulations in the UAE. Correspondingly, we help you meet all standards required by VAT legislation and senior accounting officers.