1. VAT Records Management
Businesses must ensure sales and purchase records are VAT-ready for accurate tax reporting.
- Record-Keeping: Companies must maintain detailed invoices, receipts, and transaction logs to comply with VAT regulations.
- Compliance Standards: VAT records must align with local tax laws to avoid penalties.
- Audit Readiness: Proper documentation ensures businesses are prepared for tax audits by authorities.
2. Tax Invoice Preparation
Businesses must issue VAT-compliant invoices that meet regulatory requirements.
- Mandatory Details: Invoices must include supplier and customer details, invoice number, VAT rate, and total amount payable.
- Formatting Rules: The Federal Tax Authority (FTA) requires invoices to clearly display “Tax Invoice” and follow specific formatting guidelines.
- Penalty Risks: Incorrect invoices may result in fines of up to AED 5,000 per invoice.
3. Input/Output VAT Reconciliation
Tracking payable and receivable VAT ensures seamless tax filing.
- Input VAT: Businesses can reclaim VAT paid on purchases and expenses.
- Output VAT: Companies must collect VAT on sales and services and remit it to tax authorities.
- Reconciliation Process: Businesses must compare VAT collected vs. VAT paid to determine tax liabilities.