VAT or Value Added Tax, is the indirect tax levied on different goods and services available in the UAE. Due to the complexity of the VAT calculation, these services should be outsourced to a qualified consultant who will ensure complete correct tax calculation according to the law. BMS Auditing is the best consultancy firm dealing in VAT accounting on a personalized scale for any kind of business for it to lead through the very intricate world of VAT.
What is VAT Accounting?
VAT accounting involves massive record-keeping and documentation. The tax law of the UAE mandates that every taxable person maintain correct information. The records will enable one to determine the right consumption tax amount payable. Proper documental VAT not only reduces tax liabilities but also avoids penalty claims for tax non-compliance.
Types of VAT
Input VAT: Input VAT is levied on the purchases in respect of which, if you are a registered buyer with FTA, it is recoverable from your tax liability.
Output VAT: Charged on sales of goods and services, this is computed straight off the sale transactions of yours.
VAT Rates in the UAE
- Standard Rate: This rate of 5% applies to most types of goods and services.
- Zero Rate: It only applies to exports as well as some educational services.
- Exempted: VAT is not applied to some financial services and certain dwellings.
VAT Registration
The business will be obliged to register for VAT if it satisfies the conditions provided in the law, especially at a taxable value of AED 375,000 of its supplies and imports. Nonetheless, the figure can be reduced to AED 187,500 to enable voluntary registration. BMS Auditing can help make this complex process easier to comply with.
Important Documents on VAT Accounting
For smooth VAT accounting, the following documents should be kept by businesses.
- All supplies and import accounts
- Tax invoices and credit notes
- Annual accounts and general ledgers
- VAT ledgers and purchase daybooks
In case of a failure to maintain proper records, a penalty will be imposed of more than AED 10,000.
Why Proper VAT Accounting is Important
- Legal Compliance: It is compulsory for all taxable businesses registered with FTA.
- Easy Filing of Tax Returns: Proper filing can make the process easy and simple.
- Tie-up in Financial Planning: Proper VAT accounting helps in budgeting for future expansion.
- Eases Audit Burden: Maintaining proper records eases the burden on income tax auditors.
- Tax Benefits: Precaution through information about VAT schemes helps keep you updated to get the maximum advantage.
Reverse Charge Mechanism
The reverse charge mechanism would transfer tax liability to the customer from the seller in the case of importing goods and services. Documentation would be required with customs documentation and invoices.
VAT Accounting Service by BMS Auditing
- BMS Auditing provides its customers with comprehensive VAT accounting services.
- VAT registration and filing service is provided along with a detailed tax planning review for compliance issues.
- Besides, it maintains a record of financials, balance sheets, and profit & loss accounts.
- Training on UAE VAT laws and regulations.
- Assistance in the Reverse Charge Mechanism.
- The latest updates on new legislation by FTA at the earliest.
We are here to answer any questions you might have on VAT accounting.
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Let BMS Auditing take the stress out of VAT accounting for your business in the UAE!
