Consultation and Guidelines
Value Added Tax (VAT) is a tax on consumption and it applies to almost all goods and services. As most of the management of the companies might be aware of the fact that as part of diversifying the economy and revenue generation, the GCC governments have decided to adopt Value Added Tax (VAT). UAE is also going to adopt VAT which applies to almost all goods and services except basic food items, healthcare, and education.
Though the burden normally lies on the ultimate consumer the business entities need to change the systems, processes, and procedures to comply the new legal requirement which is expected to be implemented by the government effective from 1st Jan 2018.
The above requirements demand more control and safety on stock, invoices, and records, ensure proper filing system, modification/ upgradations of software, compliance of due dates for collection, payment, and remittance of tax, filing of VAT returns to govt etc. Then the role of the accountant will be very important for the compliance of VAT. Maintenance of accounts and records is also important as per new company law etc.
As per Article 26 of the Company Law - every company shall keep the accounting records for a period of 5 years from the end of financial year of the company.
Article 348 - For failure to keep the accounting record to explain the entity’s transactions ( Fine Aed 50,000 to Aed 500,000).
Article 349 - If the company fails to keep the accounting records for the period stipulated (5 years). (Fine will be Aed 20,000/-to 200,000/- will be imposed.
The Company Law also requires that all the mainland companies have to ensure their Memorandum and Articles are in accordance with the new law before June 30, 2016.
Pradeep Sai | Partner
Mob: +971 556530001