EDITOR’S QUESTION
Automating VAT practices
is best way forward
VAT practices are nothing new for global businesses but UAE organisations
need to be well prepared for the changes says Mansoor Sarwar from Sage.
A
s an enterprise
application
vendor, what are
the best practices you
would recommend for
end users implementing
the GCC VAT module?
Mansoor Sarwar is Director Technical Services
and PreSales, Sage Middle East.
C
ompliance with the UAE VAT Law
may require significant changes
by a business to technology,
operations, financial management and
book keeping practices.
The law, which comes into effect across
the six Gulf Cooperation Council nations
on 1 January 2018, sets administrative
penalties for businesses that fail to
submit required information in Arabic
when requested by the Federal Tax
Authority, that deliberately provides false
information, and that deliberately destroys
documents that were meant to be sent to
the FTA.
The stringent reporting and record-
keeping requirements suggest that proper
accounting systems and processes will
form the foundation of compliance.
However, the reality is that, because
businesses have never had to deal with
tax before, it is unlikely that their current
systems and processes are VAT ready.
Here are just some of the implications
of the new VAT law on business
accounting and record-keeping processes:
Businesses will be required to keep
50
records of any information that can
verify their tax payments and receipts,
including general ledgers, invoices
issued and received, credit notes, debit
notes and annual accounts
Businesses will need to keep records of
the following information for at least
five years:
w w Tax invoices and credit notes
w w Imported and exported goods and
services
w w Goods or services that have been
disposed of
w w VAT account, which includes VAT
due on taxable supplies, VAT due
after an error or adjustment, and
recoverable tax
Businesses are required to issue a VAT
invoice, and in some cases a simplified
invoice. The VAT law stipulates that
invoices must:
w w Be in Arabic
w w Have the words Tax Invoice
displayed in a prominent place
w w Be in UAE Dirham and if the
amount is in another currency, it
must be converted to UAE Dirham
w w Be issued within 14 days of the
date of supply of goods or services
w w Include the name, address and tax
registration number of the supplier
w w Include the date of issue
w w Include a description of goods or
services
w w Include the total amount payable
and the total VAT chargeable
This might seem daunting to businesses
that have never had to issue tax invoices
and credit notes or keep accurate records
of their transactional data. Businesses
also need to start getting into the habit of
submitting their tax returns on a quarterly
basis, which can be done online through
the government’s eServices platform.
Some solutions are VAT ready and
automate a lot of these processes, so
businesses are assured that their data is
accurate and up to date. Simple and easy-
to-use dashboards give businesses insight
into their VAT collections and payments.
The software is fully auditable and makes
compliance considerations like record-
keeping and issuance of VAT invoices
hassle-free.
From a central location, businesses
can easily manage their VAT returns and
reporting, adjustments, payments and
refunds, and can open and close their
VAT periods or view the VAT payable and
refundable for a certain period. It also lets
businesses generate VAT audit reports
that list original tax invoices and credit
notes, payments and refunds, as well as a
VAT summary.
The new VAT law will have its biggest
implications on business accounting and
reporting processes. By automating as
much as you can, and opting for a system
that streamlines and simplifies record-
keeping and reporting, you have won the
biggest part of the battle.
Issue 13
INTELLIGENT TECH CHANNELS