What are the Books of Accounts to be maintained under VAT in UAE

What are the Books of Accounts to be maintained under VAT in UAE

The introduction of VAT in UAE  makes it compulsory for companies to maintain their accounts properly and regularly, every sales invoice will have to have an accompanying VAT invoice.

It is mandatory for every taxable person to maintain books of accounts under UAE VAT law. In addition to that the authority can ask for additional documents such as, annual accounts, general ledger, purchase day book, invoices issued, invoices received, credit notes, debit notes, VAT Ledger etc.

Maintenance of relevant records, supporting documents, and books of accounts is extremely crucial requirement for proper control and management of the business operations. Aiding in providing correct record of payment of cash and authentic receipt of other transactions done by the company, preservation of books is required for many purposes.

VAT Record Keeping : What are the Books of Accounts to be maintained under VAT in UAE

Each company shall maintain its accounting books/records in its place of business for a period of at least 5 (five) years from the end of the financial year of the company. UAE VAT property firms must keep financial records for 15 years.

Following record examples that shall be maintained by the business with accuracy, paper/electronic format, for specified period.

Sales Invoices

Purchase Invoices

Debit or Credit Notes

Import and Export Records

Accounting Books

Zero-Rated/exempt Supplies and

Purchases Records of goods issued free or allocated for Private use

Records Maintained by the Taxable Person

What are the Books of Accounts to be maintained under VAT in UAE

According to the VAT Decree Law, the taxable person shall keep the following records:

1. Records of all supplies and Imports of Goods and Services.
2. All Tax Invoices and alternative documents related to receiving Goods or Services.
3. All Tax Credit Notes and alternative documents received.
4. All Tax Invoices and alternative documents issued.
5. All Tax Credit Notes and alternative documents issued.
6. Records of Goods and Services that have been disposed of or used for matters not related to Business, showing Taxes paid for the same.
7. Records of Goods and Services purchased and for which the Input Tax was not deducted.
8. Records of exported Goods and Services.
9. Records of adjustments or corrections made to accounts or Tax Invoices.
10. Records of any Taxable Supplies made or received.
11. A Tax Record that includes the following information:

• Tax due on taxable supplies
• Tax due on supplies where tax is to be paid on reverse charge
• Tax due after correction of errors or adjustments
• Input tax recoverable on inward supplies or imports
• Input tax recoverable after correction of errors or adjustments

Penalty for not keeping proper records and documents

It is necessary for all the taxable businesses to keep their books in an organized and standardized form and must keep all the documents to avoid penalty and fines.

If a taxable person or business fails to keep required records, books and documents, penalty of AED 10,000will be given and then AED 50,000 if the offence is repeated again.

Time period for retaining Accounts and Records: What are the Books of Accounts to be maintained under VAT in UAE

Accounts and bookkeeping records maintained by taxable persons should be retained for a period of 5 years after the end of the tax period to which they relate. 

For example: A Tax Invoice for a supply on 10th January, ’18 relates to the tax period of January-December ’18. Hence, it should be retained until 31st December ’23.

However, note that records pertaining to capital assets like machinery, furniture, etc. should be retained for at least 10 years from the end of the tax period to which they relate and records relating to real estate should be retained for at least 15 years from the end of the tax period to which they relate.

Hence, though businesses in UAE have done record keeping and maintained accounts and records for their internal reference in the past, the introduction of VAT requires certain record keeping and accounts and records to be mandatorily maintained. The details required in these accounts and records have been specified along with the period for which they should be retained. It is imperative that businesses use a software which will make the task of maintaining records and managing these accounts and records easier for them. Businesses should evaluate and decide upon a software which assists them in maintaining systematic and error-free accounts and records with inherent compliance validation. The business software should be their instrument for compliance under VAT while helping them maintain their focus on the core business activities.

Significance of maintaining books of accounting in UAE in a nutshell: What are the Books of Accounts to be maintained under VAT in UAE

• Bookkeeping is essential for proper control and management of business operations.
• This practice will help in the matter of coming up with accurate receipt and cash payment, including other transactions registered by the company as well.
• Since it is mandatory under the UAE Company Law and VAT law, violation of the rule might land the firm in legal hassles.

Thus, it might prove to be an act of negligence if an individual decides to overlook the significance of maintaining books of account.

From a compliance perspective, businesses that work with automated software in any way will need to update their tools to incorporate the new VAT laws. This update will affect your sales operations, accounting methods, and expense management systems, so you need to be confident that you are VAT-compliant in all realms of your business.

 Need to Upgrade to Reach Accountant Online VAT Accounting Software:

Reach Online VAT Software is carefully designed with the requirements of UAE businesses in mind. With the upcoming VAT regulations, businesses need to be perfect in every transaction they perform. With Reach Online VAT Software, you can use VAT treatments to mark a customer as VAT registered, Not VAT registered, or Non-GCC customer. You can also select the VAT that applies to each goods or service, mark goods as excise or services as digital, and record the Place of Supply for every transaction. At the end of every month or quarter, depending upon your business scenario, Reach Online VAT Software  generates your VAT Summary Report with just a click of a button. This further automates your cash flow and bookkeeping, ensuring fast and hassle-free payment collection. Just email your invoice, and when your client makes their payment, that information gets automatically updated in your bank records.

Keeping pace with the coming changes, Reach Online Software is VAT-ready. Besides managing your business finances, we help you capture your contacts’ VAT details, raise VAT compliant invoices, create business reports, and generate VAT returns with Reach Online VAT Software at no additional cost.

Top Features of the Reach Online VAT Accounting Software are:

• Accounting Management: All functions relating to accounts are inbuilt with the software. You can manage your Accounting Ledgers, Bank & Cash Operations, Purchase & Sales Estimates, Warehouse Allocations, Expense Recording, Expense Grouping, Payments – Part or Full, Journal Entries, Income and loss a/c, Balance sheets, Receipts – Part or Full, Contra Entries, Financial Reports, Day book.

• Tax Management: Our accounting Software automatically calculates the taxes relevant for every bill created. The Software is designed as per the government norms for calculation of VAT. It also has the option to add any number of taxes relevant to the business. In case of change in tax percentages a change it in the software on your own. All you have to do is add your tax percentage and our software will calculate the taxes automatically. This multiple tax scheme can also be applied to multiple products on a single purchase.

• Income Management: The Company can create Quotations then the same can be converted as a Sales order or Pro-forma invoice or Invoice. From Invoice you can create Receipts as well. Accountants will be able to know what payments have been received and what are pending in the reports. You can also set reminders for receiving payments.

• Expense Management: You can create Purchase Orders then the same can be converted as bill or payments. You can also create Debit notes for purchase returns. Accountants will be able to know which purchase bills have been paid and which are pending in the reports. You can also set reminders for making payments.
• Invoicing: Generates VAT compliant invoice of the company in the specified design as requested by the client or can choose from the available templates in the software. It also converts quotes to invoice .One of the features is the software can convert the Foreign currency invoices to base currency and further calculating the VAT at UAE standard rate.

·         Print Tax Invoice In Arabic: Reach software lets you print invoices in Arabic, English or both, as per the mandated guidelines of GAZT and FTA.

• Auditor View: Full-fledged Financial reports, Tax reports VAT reports, read process by auditor, with e-filing options, PF & ESI Reports, Tax Consulting Modules are some to be named.
• Check Post for VAT returns: As the software has been designed exclusively to aid individuals and entities to be VAT compliant in UAE, the set of rules and regulation laid by FTA (Federal Tax Authority) of UAE are embedded in the software. Hence any process error will be popped up by the application can be viewed .For instance wrong Tax Registration Number, incorrect taxable figure, wrong taxation period.
• Automatic Update on Tax legal Sections: As the Reach software are cloud computed software gets upgraded to update any revised tax laws and section if any in future.
• Computation Of VAT Returns: The software is inbuilt with all the detailed crucial information  on tax computation Tax Assesee can  fetch all the details of all the taxable transactions It lists down transactions which are included and excluded in the VAT return  calculate input tax, reverse charge and output tax to avail claim if any 

• Filing Of VAT Returns: The registered businesses in UAE are required to generate the VAT return File from their accounting software, login to the FTA’s e-tax portal and upload the return file. On the basis of the uploaded return file, the e-tax portal will validate the file and accordingly the details from the file will be auto-populated in the online return form. Reach VAT software is designed to ease the process of filing returns and comes under the purview of FTA prescribed set of rules and regulations.

• * VAT Reports etc.
• Calculate VAT automatically.
• VAT support in Sales, Purchase, Sales and Purchase returns, Journal entries.
• Generate Federal Tax Authority compatible tax reports.
• VAT Paid (charged by suppliers) and Vat Collection (Charged to customers) Analysis.
• Transaction wise details of VAT paid and VAT collected.
• Attach every Vendors/Customers VAT number and other details.
• VAT supported for Goods (stocked) and Service (non-stocked) items.
• Online application accounting.
• VAT Account Reconciliation, VAT Collection & VAT Paid analysis report.
• Report export to excel and other standard formats.
• VAT returns statement compatible with Federal Tax Authority standards.

Online accounting VAT software enables you to file vat returns, manage accounts and other business operations from any geographical area be it at the comfort of the house.

• Receipt: Receipts can either be manually entered or imported it in excel format easily.
• Payments: Payments can either be manually entered or imported it in excel format easily.
• Multi Company: Manage business through comfort of the smart phone.
• Tally Import: Tally files can be easily imported to Reach Software of various periods and manage business easily.
• Auditor’s Report: Full Financial Report are available,Read process by Auditor,Tax Reports,VAT Report with e-filing options,PF & ESI Reports,Tax Consulting Modules are some featuress mentioned.
• Mobile Application: Access business information through tabs and android smart phones, pick photos of expense vouchers and attach to expenses, daily profitability and other key reports can be viewed on phone.

         ·            Business Automation: Leads from all sources,Leads extractions via mail server,Converting leads to appointments,Quotes,Converting quotes to Invoices,Email-SMS update,Delivery status update,Work pending strategye.

• Business Intelligence Dashboard: The software has a feature of providing you key statistics of the business at any given point of time.The dashboard displays work status, profit and loss, expenses graphically.It also features  best Selling Executive, Highest Selling product, Largest value customer for the month. Every night the client gets a SMS summing up the entire sales , expenses ,case production ,and stock value for the day.

• Bank Synchronization: Bank Statements can be imported in to Reach software through excel files.
• Security: There is complete security of data stored in the hard disk. Data can be accessed and control by creating access restriction. One time password facilities also ensures a check in the log in to the website. 

• Run Business from anywhere: The business can be run access data from anywhere at your comfort. Just like checking mails from the laptop or systems.

• Free and Automatic Upgrades: At Reach Accountant you will be provided free services of upgrading the software frequently with new features and use it absolutely free. 

• No investment in expensive hardware: The software is browser based. It just requires internet connection which can be connected to multi computers without using LAN and servers.

• API: The client can integrate the existing software with Reach accounting application ,

• Automatic Data Backup: Reach stores all the data in servers offsite with regular backups. Hence business information is safe and secure

·         User Interface & Complexity:The software is designed to make its use friendly and easy,no cumbersome process to operate the application and software.

• Scalability:It is an VAT accounting software which can scale with your business needs. . Some software companies offer only one version of the product and some have progressive versions depending the business type or size. Reach Accounting software offers both integrated an entry level version as well as a feature rich version which you might not need for the current business processing but will definitely need in future for business development.

Top Two Features of the Reach Accounting Software

• Outsourced Accounting: The software enables to finish the outsourced accounts in less than 30 minutes.

• Real Time Accounting: Allows client to record sales and purchases online, while finalizing accounts that is checking the Audit trail, providing MIS reports, checking Tax reports, printing financial reports and filing taxes.

Technology Used

Reach has implemented the latest technology Cloud Computing to handle  day to day business transactions just  a click away from your browser from any part of the world.

Cloud Computing is a concept through which organizations can manage their data centres, processes and applications online via internet on the scheme of pay for use basis. Many of today’s small businesses find great advantages when adopting a virtual office environment. Rather than maintaining one centralized business location, employees are given the opportunity to work from home and connect via computer. Virtual offices can stretch across the country, or even exist within a small geographic area while still providing benefits to both employees and employers. Yet certain business functions need to be managed differently in a virtual environment. When it comes to accounting, a cloud system can improve virtual office management, especially for tasks such as expense tracking and financial report consolidation.

Benefits of Cloud Accounting

1. Spread the cost of the software by making payments by monthly subscription instead of one lump sum.
2. All the upgrades for cloud accounting software are carried out by the supplier at no extra cost, so you are always on the latest version.
3. You can access cloud accounting software anywhere that has an internet connection, so no need to use a particular computer or be stuck in the office.
4. As the name suggests, all the data is stored securely in “the cloud” which means on the supplier’s bank of servers, continually backed up, so you never have to worry again about using up your own hard-drive or taking regular backups.

Best of all, with cloud accounting software, your accountant can share your data, so they can help you if you are stuck on recording certain transactions in your accounts, like the purchase of a new laptop.  They can post their year-end journals directly, so your data is always up to date, but more importantly we can be more help to you.  For example if you would like your accountant to check the figures for your VAT Return or even file it,or prepare some management