Payable Vs Receivable VAT
VAT acts as an indirect tax, where the Government necessitates you to work as an agent for collection and remission of taxes to the UAE Government. The VAT thus collected for conducting any sale implies payable to government, while VAT you pay on any purchase indicates receivable from the country’s government.
Mandatory Records to Maintain as Per VAT Rules
- According to rules related to VAT and VAT accounting Dubai, every business entity or company has to maintain a specific record of the VAT, which it charges on sales and that it pays on making purchases.
- Company has to maintain different records and the necessary information as demanded by major taxation laws. This step is helpful at the time of filing VAT returns in an accurate way and within the stipulated time.
Both of these steps will provide sufficient records and documents to perform VAT auditing or VAT accounting by reputed Government agencies.
Requisites to File VAT Returns
VAT rules never specify the list containing accounts or its nomenclature. However, it mandates maintaining appropriate records for the identification of mentioned things for filing returns-
- Identification of your total sales, which include export sales, local sales and exempted sales
- Identification of your total purchases i.e. import and local purchases
- Refundable and/or payable VAT for the Dubai government
Procedures Involved in VAT Accounting
We all know that VAT is a type of transaction tax and because of this, it influences various procedures present in your own business.
Subsequently, you require a few of the compulsory measures related to VAT accounting. These include the following-
- Master data of each of your customers and suppliers, along with knowledge about their establishment venues
- Tax code of various transactions
- Masters of the inventory
- Schemes related to sales and purchases of varying accounting entries
- Availability of general ledger
- Mandatory VAT reports and records
In case you lace control, ownership or perceptibility covering each of the aforementioned areas or anyone among them, this would influence the submission of your VAT returns and thereby, your available financial statements. Furthermore, if you fail to provide any information correctly, you will end up paying big fines and penalty amounts. If you are looking top audit firms in Dubai you can visit accounting service now.