VAT (Value Added Tax) is a charge imposed on certain provisions of goods and services in the UAE. VAT is calculated and charged on the value of services or goods that has been supplied under each sales or purchase transaction.
VAT is not a cost to the business, unless simple things are done timely and accurately. VAT is form of indirect taxes, were the Government is necessitating you to be an agent to collect and remit taxes to the Government. The tax (VAT) collected on sales is your payable to the government and tax (VAT) that you paid on account of purchase is receivable from Government; hence, the difference shall be your payable to or receivable from the Government. Accordingly, Companies must maintain a separate record of the VAT you charge and the VAT you pay on your purchases. Over and above this companies are required to maintain number of records and information as required by the taxation laws. This will enable you to file the VAT return timely and accurately. Further, this will ensure sufficient documents and records for VAT audit by the Government agencies. VAT rules does not specify the list of accounts or nomenclature of accounts, However it does require to maintain proper records to identify the below which will be required to file the returns:
Your Total Sales Identifying
Export sales and
Your Total Purchases Identifying
The VAT you are payable /refundable for the government.