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VAT Records & Accounts


VAT Records & Accounts


Under UAE VAT law, all business owners are required to maintain their financial and accounting records going back at least five years. This rule applies to all business owners, whether or not they have registered for VAT. 

Financial documents to be maintained

Tax Invoice

A tax invoice is a document that records a taxable sale, along with any details pertaining to it. While every VAT registered business is required to issue a tax invoice to its customers when making a sale, this can be done in a few ways, depending on who the customer is. Let’s take a look at each type of tax invoice.

Normal Tax Invoice

A normal tax invoice is issued by a VAT registered business to a customer, if the customer also happens to be registered under VAT, or if the value of supply made is greater than AED 10,000. If the goods were delivered, or the payments were received, before invoicing a customer, the respective invoice(s) must be issued within 14 calendar days from the date of the supply.

Contents of a normal tax invoice

A VAT-compliant tax invoice should contain:

Simplified Tax Invoice

There’s another type of tax invoice called a “simplified tax invoice,” which is issued if:

A simplified tax invoice must contain: 

Self-billed invoice

While invoices are normally issued by a supplier to a customer, a self-billed invoice is different. Here, the customer will issue an invoice to themselves during purchases, on behalf of the supplier. For this to work, both the supplier and the customer must be registered under VAT. This happens most frequently when the recipient’s accounting practices are more efficient than the supplier.

A self-billed invoice can be issued by a customer if:

Credit Note

A credit note documents any changes that either cancel or reduce the value of a previous transaction. They’re usually created to record changes made after an invoice has been issue to a client. There are two kinds of credit notes: a tax credit note and a self-issued tax credit note.

When can a supplier issue a credit note?

A credit note is issued to a customer when:

Tax Credit Note

In order to be accepted by the FTA, a tax credit note must contain:

Self-issued Credit Note

Credit notes can also be issued by the recipient themselves on behalf of the supplier if:

Debit Note

Debit notes are issued to rectify erroneous values recorded in previous invoices. For example, if a product costs AED 450, and it’s invoiced for AED 400, then a debit note of AED 50 is issued by the supplier (or if the VAT amount on the invoice is less than the actual VAT to be paid by the customer). It’s also issued in cases where the vendor has billable expenses that were not added to the invoice that was issued earlier.

Bill of Entry

Bills of entry are used to capture the VAT paid to the customs office while importing goods into the UAE, as the invoice issued by the non GCC vendor will not include VAT. This document will also capture any additional charges and duties borne by the importer, along with the purpose of the import.

 



       
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