Three reasons why the companies are making mistakes on VAT implementation
Sage Middle East's technical director Mansoor Sarwar explains how to fix recurring slipups
Sage Middle East's technical director Mansoor Sarwar explains how to fix recurring slipups Non-compliant invoices: Firms are muddled with non-VAT-compliant invoices due to lack of understanding of tax procedures. By law, an invoice must clearly be labeled a ‘tax invoice’ and specify if a transaction took place in UAE dirhams or currency was converted. Invoices must be issued within 14 days of supply date and include mandatory fields such as supplier name, address, tax registration number, issue date, description of goods or services, total amount payable and total VAT percentage. Old systems: Cost is the primary reason most companies don’t want to upgrade accounting systems. But VAT return filings are only available online and the process is completely paperless. Companies in the UAE should make digitisation a priority
for a seamless and hassle-free compliance process. The auditing process is designed to be more efficient and less time-consuming for companies using Federal Tax Authority (FTA)-approved tax accounting software and procedures. Untrained staff: Even the world’s most advanced VAT accounting system can’t guarantee compliance if employees aren’t effectively trained in implementation. Companies must focus on training their staff on the basics of VAT, including concepts of zero-rated supplies, exempt supplies, reverse charge and tax groups. It’s important to recognise that VAT will bring greater revenues to the national economy, which in turn will drive business efficiency.