VAT Accounting Services in UAE

• Output VAT:- The output VAT can be computed directly on the supply of goods and services on sale.VAT accounting involves determining how much VAT a business needs to remit, along with addressing other VAT-related questions relevant to the business operations.

VAT Accounting Record:-

Under UAE Tax Law any taxable person needs to preserve a record for at least the earlier five years of business. The accounting records should be detailed to the extent that every piece of business information can be derived from them as and when it is needed. It also assists in determining the level of consumption tax payable, assists in reducing the tax liability and the keeping of such records is now compulsory at an international level.

Fine and penalties for violations:-

Fine/penalty will be imposed in case of failure to maintain accurate accounts as a bookkeeper.

• On first time violation, the individual or business who fails to maintain proper records will be fined a penalty of AED 10,000.
• The second time the offense is committed, then a fine of AED 50,000 should be met.

VAT Accounting in UAE

In line with the regional understanding of the implementation of the VAT, the UAE is one of the GCC countries that has in principle endorsed the idea.

Unified VAT Agreement (UVAT)

Main points of this document are given below:-

• The UAE, as a member of the GCC, has embraced the principle of implementing VAT.
• The GCC countries are bound by the Unified VAT Agreement (UVAT) which provides direction to the jurisdiction for VAT implementation.
• This decision not only aligns with regional agreements but also helps diversify the country's reliance on oil and hydrocarbon revenues by exploring other sectors.
• This led to the development of the VAT Accounting in UAE and the former is also referenced to another source of the latter.
• The standard VAT rate in the UAE has been set at 5%, effective from January 1, 2018.

• Tracks of VAT records:-Till the implementation of VAT accounting, corporate and the concerned authorities were unable to verify if all the tax papers were submitted or not. The latter performs the function of a checklist that includes the names of the materials to be filled and submitted in the proper style.

• Lowers the Risk of Tax Audit:-By utilizing VAT accounting services from tax consultants, businesses will have comprehensive data on all transactions. This reduces the likelihood of a tax audit being conducted by the authorities, as accurate and detailed records are maintained.

• Acts as Evidence:- If the authorities decide to conduct a tax audit, VAT accounting managed by tax consultants will enable the business to present accurate transaction details related to tax, ensuring compliance and transparency.

• Reduces the Risk of Penalties:-With VAT accounting handled by professional tax consultants, businesses are ensured compliance with all rules and regulations set by the authorities, thereby minimizing the risk of penalties. The consultants also keep VAT procedures updated over time.

• Creates Awareness for VAT-Related Schemes:/Tax consultants specializing in VAT accounting keep businesses informed about new government schemes related to VAT.

• Boosts National Revenue Growth:-VAT is crucial for a country’s revenue. Proper VAT accounting, facilitated by tax consultants, ensures accurate tax payments by businesses, preventing negative impacts on the national economy.

 

Outsourcing VAT accounting services entails the following benefits to involving professional tax consultants; Simplified tax returns, lowered audit risks and penalties. VAT accounting services are not only assisting in accurate and comprehensive record keeping but also about the schemes that pertain to VAT to support the growth of businesses and importantly, the national revenue.