Vat Accounting in Dubai

UAE VAT Accounting

VAT accounting is a process related to the VAT section of a business concern. It is important for every taxable person to maintain a book of records under UAE Tax Law, and it requires detailed documentation. Proper documentation helps to identify the consumption tax that needs to be paid on time. It reduces the tax burden. The maintenance of VAT records is mandatory in the UAE. Providing the best VAT consultancy services in Dubai and UAE, BOOKBLISS  provides all the essential activities that you need to be managed with regard to VAT accounting including VAT data, review of tax reports, tax calculation and filing, VAT documentation, etc in a very seamless way. 

Different Types of VAT

There are two types of VAT: –

1. Input VAT

The Input VAT is charged on goods when purchased or on services when offered. If you are a registered buyer with the FTA, the VAT amount will be deducted from your settlement.

2. Output VAT

The output VAT is charged on the sale of goods and services delivered. It is calculated directly. 

VAT rate in the UAE

VAT is charged on different category basis as per the following rate in the UAE:

• Standard Category

Automobiles, electronic items, fuel, jewellery, food & beverage, apparel, entertainment services, cosmetics, restaurants & hotels, construction, commercial leasing, etc. attract the standard rate of 5% VAT.

• Zero Category

The export of goods or services, international transportation of goods and passengers, supply of certain means of transport, supply or import of investment precious metals with 99% purity and more, residential buildings, buildings used by charities, certain education services, and certain healthcare services attract a Zero rate VAT.

• Exempted Category

Financial services, certain residential buildings, bare land, and local passenger transportation are exempted from VAT charging.

VAT Registration in Dubai 

A company should  if the taxable supplies and imports exceed AED 375,000. A company can register voluntarily if the amount exceeds AED 187,500. Finding reliable VAT accounting consultants in Dubai can solve all kinds of issues related to your VAT procedures. 

Important Documents for VAT Accounting

A business should submit the following documents in order to process VAT Accounting in UAE. 

• Accounts of 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 Notes and alternative documents received.
• All Tax Credit Notes and alternative documents issued.
• Accounts of Goods and Services purchased and for which the Input Tax was not subtracted.
• Accounts of exported Goods and Services.
• Accounts of adjustments or corrections made to accounts or Tax Invoices.
• Tax due after the error correction or adjustment.
• Annual Account details
• General Ledgers
• VAT Ledgers, Purchase daybooks
• Credit and Debit notes, etc.

A penalty of AED 10,000 will be imposed on an individual or business who fails to keep proper records of the transactions made. 

Why You Need Proper Accounting for VAT?

VAT accounting in Dubai demands a proper accounting system to make the procedures error-free and accurate. Systematic and well-organised accounting services are required to fulfil the VAT needs in compliance with the UAE law. 

• Mandatory requirement by law

Proper VAT accounting is mandatory for every taxable business registered with the FTA.

• Ensures easy tax returns

VAT accounting ensures the access of all the necessary documents relating to tax filing at one place. This can make the tax return filing easy. 

• Helps the expansion to be flexible

VAT accounting provides the details of the estimated total amount to be paid as taxes. This will help the management to set the budget if it wants to expand the business. 

• Serves as a checklist

VAT accounting serves as a checklist that allows the business and the concerned authorities to check whether all the tax-related documents are submitted or not, as it consists of the names of the materials to be correctly filled and submitted. 

• Reduces the burden of tax audit

Proper accounting and financial statements to ensure the business keeps all the data related to all the transactions made by it. It helps the company from future tax audit or inspection from the authorities to conduct the assessment without much burden.

• Familiarises with new VAT Related Schemes

VAT accounting can create awareness among the companies about how to get the benefits issued by the authorities’ from time to time. 

• Enhances the National Revenue Growth

VAT accounting is a process which calculates and registers the total amount of Taxes to be paid by a company to the government. The proper tax filing will surely fill the coffer that will boost the national growth.

• Decreases the Risk of Penalties

VAT accounting ensures that the company is complying with all the rules and regulations set by the authority. Proper tracking and payment to FTA reduce the risk of getting an administrative penalty by the government.

Application of Reverse charge mechanism in Accounting System

Reverse Charge Mechanism is a process under which the accountability of paying tax to Government shifts from seller to the buyer. This mechanism is applied on the import of goods and services into UAE. Collection of proper documents relating to the import of goods will be easy to reclaim the tax through RCM. Booking RCM in the system will have accurate VAT 201 form, and the VAT filing should match with the Internal VAT report.

Thus, as a recipient or buyer of goods or services under the reverse charge mechanism, the following responsibility needs to be settled:

• • All the customs documents and its supported invoices
  • Account the value on which tax needs to be levied
  • Determine the VAT due on reverse charge supplies
  • Pay VAT to the government
  • Claim Input Tax, if eligible.
• Maintain the records such as invoice and other documents to corroborate the tax payment and input tax claim

Accounting Entries for Booking the Tax in the system

• For Purchase/ Expenses

Purchase Account DR

Input Tax Account DR

Supplier Account CR

• For Sales Accounts

Customer Account DR

Sales Account CR

Output Tax CR 

• Output Tax – Input Tax = Net Vat Payable Account

Net vat Payable Account DR

Federal Tax Authority CR

BOOKBLISS & VAT Accounting Services in Dubai 

BOOKBLISS is a  provides accurate accounts on taxation and accounting tasks. BOOKBLISS VAT accounting consultants are competent in providing VAT accounting services on behalf of the company to make your VAT accounting procedures simple, cost-effective, and accountable. We will take care of your Bookkeeping and VAT accounting services in Dubai and save you from facing any penalties and fines in your business. 

BOOKBLISS provides the following VAT Accounting services to the business community:

• We do the VAT Registration & tax filing process
• We help you in VAT planning
• We do the book of records maintenance
• We maintain your balance sheet carefully
• We maintain your Profit & Loss account properly
• We train you on VAT laws in UAE
• We interpret and classify tax group for you
• We help you to process with accurate and quick tax filing 
• We update you with FTA’s new legislation and rules
• We provide unique advice on financial and legal issues
• We provide advice on VAT rates
• We help you maintain the requirements for the Reverse Charge Mechanism
• We train you on VAT-related accounting for Dubai Expo 2020

BOOKBLISS has been dealing with the vital process of accounting and taxation for various clients engaged in numerous businesses in the UAE. Our professional experts examine the nature of your business, deal with your VAT issues and makes it easier to handle. With our adept team, we provide quality consultancy services to SMEs, individuals as well as to the big corporates in the field of CFO Services, Auditing Services, Accounting & Bookkeeping Services, Accounting Software services and Due Diligence Services.

If you have any doubts regarding VAT Accounting process or about your current business, feel good to discuss with us. VAT accounting in Dubai, UAE is no more a tedious task. BOOKBLISS is there for your support! 

Our VAT Accounting Consultants will give you one-hour free session to keep your doubts away!