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VAT Accounting In UAE

A value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed. If simple tasks are completed on time and correctly, VAT is not an expense to the company. VAT is a type of indirect tax, where you are allowed by the government to be an agent to collect and pass taxes to the government. The tax (VAT) levied on purchases is payable to the government and the tax (VAT) charged on the purchase account is payable to the government. Hence, the difference is either payable to, or receivable from, the government.

VAT Accounting Procedures in UAE


VAT is a transaction tax and therefore affects various procedures within your company. As a result, there is a need for VAT accounting steps and controls, which are:
  • Master data of suppliers and customers to the business, knowledge of their establishment position
  • Tax coding of transactions
  • Inventory masters
  • Sales and purchase schemes of accounting entries
  • General ledger
  • VAT recording and reporting

  • If any of these areas are covered by a lack of ownership, regulation, or perceptibility, this can affect the submission of VAT returns and financial statements. You may be subject to heavy fines and penalties if the data is not correctly given.

    Benefits of VAT Accounting


    You have a good understanding of what VAT is all about and what its forms are. Why is VAT accounting relevant is the question that could linger in your mind? The answer is as shown below:
    Easy Tax Returns
    Through carrying out VAT accounting, a corporation would be able to access all the necessary documentation relating to tax reporting at a single venue, thus significantly improving the process of filing the company's tax return.
    Provides Flexibility
    Vat accounting would include the approximate gross amount that needs to be charged in the form of taxes if a corporation chooses to expand it. The company's management will go through the VAT accounting study, and it can decide to expand the business according to the set budget.
    Tracks of VAT records
    VAT accounting helps the organization and the authorities concerned to verify whether or not all tax-related records are submitted. It acts as a checklist consisting of the names of the materials to be filled out and submitted correctly.
    Lowers the Risk of Tax Audit
    The company will have the data linked to all the transactions conducted by the company by using VAT accounting. The chances of a tax audit being undertaken by the authorities concerned would be significantly decreased.
    Reduces the Risk of Penalties
    VAT accounting would ensure that the organization complies with all the laws and regulations set by the authority concerned, which would minimize the possibility of the government penalizing it. It will also keep changing the procedures for accounting for VAT over time.
    Creates Awareness for VAT Related Schemes
    The government keeps bringing in new Value Added Tax schemes from time to time. VAT accounting will create awareness among businesses about how different businesses would profit from the benefits.
    Boosts National Revenue Growth
    For the economy of a region, VAT is a critical instrument of revenue generation. VAT accounting is a mechanism by which the total amount of taxes to be charged by a corporation is measured and registered, and if not done correctly, the overall economy of the country will be tremendously affected.

    VAT Consultants in UAE


    Vatbox, the leading VAT consultants in the UAE, have extensive experience in carrying out evaluations of the VAT accounting process to ensure that businesses meet their VAT compliance needs as outlined in the UAE. Similarly, other VAT laws and accounting requirements need to be met as well.
    Call us today at VATBOX UAE to ensure complete compliance with VAT regulations in the UAE! With competitive fees, Our team offers a wide variety of VAT accounting solutions that can assist your UAE business. Along with VAT consulting in the UAE, we also provide accounting and auditing services. We partner with you to complete the bookkeeping phase of your business and VAT requirements.