Vat Accounting in Dubai
VAT Accounting Services in UAE
Value Added Tax (VAT) is an indirect tax paid on some products and services in the UAE, determined and calculated based upon their value. Because VAT accounting in the UAE requires meticulous documentation, precise recording, and analysis, outsourcing your VAT services to a qualified VAT consultant is critical to guaranteeing excellence. When it comes to VAT accounting in Dubai and the UAE, AL MERAK is widely recognized among local businesses. AL MERAK VAT accounting services in Dubai are designed to help your company record and manage its VAT operations and processes in compliance with UAE VAT legislation.
UAE VAT Accounting
VAT accounting is the process of managing a company’s VAT department. According to UAE Tax Law, every taxable person must keep a book of records, which needs extensive documentation. Proper documentation helps to determine the consumption tax that must be paid on time. It lowers the tax burden. In the UAE, maintaining VAT records is obligatory. AL MERAK offers the best VAT consultation services in Dubai and the UAE, managing all of the necessary tasks associated with VAT accounting, such as VAT data, tax report review, tax computation and filing, VAT paperwork, and so on, in a smooth manner.
Different Types of VAT
• There are two forms of VAT:
1. Input VAT.
Input VAT is levied on goods purchased or services provided. If you are a registered buyer under the FTA, the VAT amount will be deducted from your settlement.
2. Output VAT.
The output VAT is levied on the sale of goods and services provided. It’s computed immediately.
VAT rates in the UAE.
VAT is imposed on a category basis in the UAE at the following rate:
• Standard Category.
Automobiles, electrical devices, gasoline, jewelry, food and beverage, clothes, entertainment services, cosmetics, restaurants and hotels, construction, commercial leasing, and so on are subject to the regular VAT rate of 5%.
• Zero Category.
The export of goods or services, international transportation of goods and passengers, the supply of certain modes of transportation, the supply or import of investment precious metals of 99% purity or higher, residential buildings, buildings used by charities, certain education services, and certain healthcare services are all subject to zero-rate VAT.
• Exempt Category.
Financial services, some residential structures, vacant land, and local passenger transportation are excluded from VAT.
VAT Registration in Dubai
A corporation should register for VAT if its taxable supplies and imports exceed AED 375,000. A corporation can voluntarily register if the value exceeds AED 187,500. Finding reputable VAT accounting professionals in Dubai can help you tackle a variety of VAT-related concerns
Important Documents for VAT Accounting
To conduct VAT Accounting in the UAE, a firm needs provide the following documentation.
• Maintain records of all supply and imports of goods and services.
• Receive and issue all tax invoices and related papers for goods and services.
• Received all tax credit notes and alternative documentation.
• Issued Tax Credit Notes and equivalent papers.
• Accounts for goods and services acquired without subtracting Input Tax.
• Manage accounts for exporting goods and services.
• Record revisions or corrections to accounts or tax invoices.
• Tax is required after mistake rectification or adjustment.
• Annual account details
• General ledgers • VAT ledgers and purchase daybooks
• Credit and debit notes, etc.
Why You Need Proper Accounting for VAT?
VAT accounting in Dubai necessitates the use of an appropriate accounting system to ensure that the operations are error-free and precise. Systematic and well-organized accounting services are essential to meet VAT requirements in accordance with UAE legislation.
• Mandatory legal necessity
Every taxable firm that is registered with the FTA must have proper VAT accounting records.
• Ensures simple tax returns
VAT accounting guarantees that all tax-related documentation are easily accessible in one location. This can make tax filing easier.
• Enhances flexibility during expansion
VAT accounting gives information on the projected total amount to be paid in taxes. This will assist management in developing a budget if they wish to expand the firm.
• Works as a checklist
VAT accounting acts as a checklist that helps businesses and relevant authorities to determine if all tax-related papers have been filed or not, since it includes the names of the materials that must be accurately filled out and submitted.
• Reduces the burden of tax audits
Proper accounting and financial statements guarantee that the firm retains all data connected to all transactions. It protects the corporation from future tax audits or inspections by the government, allowing the evaluation to be completed with little stress.
• Familiarizes with new VAT-related schemes
VAT accounting may raise knowledge among businesses about how to obtain benefits granted by the government from time to time.
• Boosts national revenue growth
VAT accounting is the process of calculating and registering the entire amount of taxes to be paid by a firm to the government. Proper tax filing will undoubtedly replenish the coffers, so boosting national economy.
• Reduces the risk of penalties
VAT accounting guarantees that the firm follows all of the laws and regulations established by the authorities. Proper tracking and payment to FTA reduces the danger of receiving an administrative penalty from the government.
Application of Reverse charge mechanism in Accounting System
The Reverse Charge Mechanism switches responsibility for paying government taxes from the seller to the customer. This procedure involves the importing of goods and services into the UAE. Collection of relevant paperwork pertaining to the import of products will make it simple to reclaim the tax through RCM. Booking RCM in the system will result in an appropriate VAT 201 form, and the VAT filing should match the Internal VAT report.
Thus, as a recipient or buyer of goods or services under the reverse charge mechanism, the following responsibilities must be settled:
All customs documentation and supporting invoices
o Calculate the taxable value.
Determine the VAT owing for reverse charge supply.
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 Taxes 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
AL MERAK & VAT Accounting Services in Dubai
Al MERAK is a VAT advisory service in Dubai that delivers precise taxation and accounting reports. Al MERAK VAT accounting specialists are skilled in providing VAT accounting services on behalf of the firm, making your VAT accounting operations easy, cost-effective, and accountable. We will handle your bookkeeping and VAT accounting services in Dubai, saving you from incurring penalties and fines in your firm.
Al MERAK offers the following VAT Accounting services to the business community:
• Our services include VAT registration and tax filing
• We assist you with VAT planning
• We maintain the book of records
• We carefully preserve your financial sheet
• We appropriately manage your profit and loss account
• We teach you on UAE VAT legislation
• We understand and categorize tax groups for you
• We assist you with proper and timely tax filing
• We provide updates on new FTA legislation and rules
• We offer specialized guidance on financial and legal matters
• We offer guidance on VAT rates
• We ensure you meet the Reverse Charge Mechanism criteria
• We teach you on VAT accounting for Dubai Expo 2020
Al MERAK has been handling the critical accounting and taxes processes for a variety of clients operating in the UAE Our trained professionals assess the nature of your business, resolve any VAT concerns, and make it easier to manage. Our skilled staff provides excellent consultation services to SMEs, individuals, and large corporations in the fields of CFO Services, Auditing Services, Accounting & Bookkeeping Services, Accounting Software Services, and Due Diligence Services.
If you have any questions concerning the VAT Accounting procedure or your present business, please feel free to contact us. VAT accounting in Dubai, UAE, is no longer a tiresome chore. Al MERAK is available to help you!
Our VAT Accounting Consultants will provide you a one-hour complimentary consultation to clear your questions!
faq
Frequently Asked Questions on Vat Accounting in Dubai
Is it required to maintain accounting and tax records for five years?
Is it feasible to set up the VAT Report (VAT 201 Form) in the accounting software?
How is a tax-registered supplier's appointment of a clearing agent accounted for in VAT?
How can I distinguish and account for sales as zero-rated, exempt, or taxable?
What information should be included on a tax invoice?
How do we account for products supplied within a Designated Zone?
How is the supply of real estate considered in terms of VAT in a Designated Zone?
Request a Free Consultation
Fill in the form below, and we’ll get back to you within 24 hours.