What Records need to be kept by a Taxable Entity?

UAE is a land of opportunities for businesses. Over many years, businesses have seen rapid growth and explored new footholds in West Asia and African markets. The business-friendly ecosystem has enabled the success of companies in the UAE.

Value Added Tax (VAT) was introduced in the UAE and other Gulf Cooperation Council (GCC) member countries to offset the falling oil revenues and move away from the fossil dependent economy. The VAT is a relatively new tax in the UAE. The UAE residents are not familiar with the process associated with collecting and dealing with indirect taxes, as many businesses do not pay any income tax or corporate taxes in the UAE.

The businesses must understand the VAT law and follow the necessary due diligence regarding the VAT procedures, including the bookkeeping of records, accounting, payment and filing of the VAT returns in specified periods. The non-compliance would certainly invite legal actions or hefty fines from the authorities. Companies must be aware of two important things as part of adherence to compliance- the records to be retained & the time for retaining the records.

Records Retained by the Taxable Entity

As part of the operations’ bookkeeping, all the businesses must retain the financial records of the transactions made. These records will be mandatorily required to carry out any external audits as required by the company’s law or the internal audit. The following records are to be retained and maintained by all the taxable entities operating in the UAE.

  1. The records of all outward supplies from the business.
  2. All tax invoices related to the inward supply of goods and services in the company
  3. The records of all the goods and services exported
  4. The records of all the goods and services imported
  5. The records of all goods and services disposed-off or utilized for matters not related to the business operations, showing the taxes paid for the same items
  6. The record of all goods and services bought where the input tax not recovered
  7. All the tax credit notes or alternative documents issued by the company
  8. The record of any possible adjustments or corrections made to the company accounts or tax Invoices, if any.
  9. The company Tax Record with the following details:

· All Tax dues on taxable supplies

· All Tax dues on supplies where tax to be paid on reverse charge mechanism

· All Tax dues post the correction of errors or adjustments if any

· All Input tax credit on inward supplies or imports if any

· Input tax credit after correction of errors or adjustments if any

Excise Tax

For companies dealing with goods related to Excise tax in the UAE, the following records should be retained by the taxable entity:

1. Records of all manufactured, imported or stockpiled Excise goods

2. Records of all Excise goods that are exported and the evidence of export

3. Records of stock levels of excise goods which includes details of lost/damaged, or destroyed items

4. Tax records that include the following:

• Any Excise tax dues on imported Excise goods

• Any Excise tax dues on manufactured Excise goods

• Any Excise tax dues on goods that have been stockpiled.

Time for Retaining Records

The time of records that are to be retained varies based on the company’s type of goods and services.

  1. The records of all Capital assets like equipment, machinery, vehicles etc., to be retained for a minimum period of 10 years from the end of the tax period.
  2. The records of all the real estate assets retained for at least 15 years from the end of the corresponding tax period.
  3. The accounting and bookkeeping records were retained for at least five years from the end of the tax period.

How Can We Help?

Jaxa Chartered Accountants has been closely working with various UAE businesses for many years with all matters related to bookkeeping, accounting and VAT tax. Our experts work with clients to guide and assist them in record keeping as required by the law in an organized manner. Please Contact Us to know more about our services. We’d be delighted to assist!