What should we do when VAT comes into effect?

Register for VAT

The taxable person or the legal representative has to register at the Federal Tax Authority. The FTA will issue a Tax Registration Number (TRN) for each taxable person after the registration. This TRN must be used in all the communication with the FTA.

Issue VAT invoices

Companies will have to start issuing VAT invoices for each sale. VAT invoices will have to follow a standard format that will be later mentioned in the legislation. However, must include the following additional information:-

  1. The term “VAT Invoice”
  2. Sale amount excluding VAT
  3. VAT amount
  4. VAT rate
  5. TRN

These VAT invoices have to be maintained by the taxable companies for a minimum of 5 years. The business entity will have to also maintain under which emirate the revenue is earned in order to pay the right emirate.

Maintenance of books of accounts

Companies will have to maintain proper records of their financial transactions. Whether they are VAT registered or not is irrelevant, because even if a company is not VAT registered it needs to have sufficient evidence to establish that it does not need to be registered. The books of accounts have to be maintained for 5 years.

The accounting system will also need some upgrades, the changes will be required in the following areas:–

  1. Sales
  2. Purchases & expenses
  3. Bad debt expense
  4. Inventory

Filing VAT returns

These VAT returns have to be submitted every quarter. This will most probably have to be submitted on an online portal created by the FTA.

 

We, at msi Alnoman and Ravi, are qualified to assist you through every step for your business. Our thorough knowledge in this field is ideal to guide your business, minimizing risk, to benefit your business. To find more information on VAT you can visit the following:–

  1. Ministry of Finance
  2. Introduction to VAT
  3. Understanding VAT

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