Having a thorough knowledge between VAT input and VAT output can help you get you r VAT accounting right. A businesses requires all aspects of VAT; including output tax and input tax. VAT when registered for businesses, it adds value to the goods and services they supply. They also reclaim VAT incurred on goods and services.

The federal Tax Authority (FTA), the government entity responsible for the administration, collection and enforcement of federal taxes was established under federal Law by the President of UAE, via federal decree-law no.13 of 2016.

Here, let’s take a closer look at these concept and explain the differences between them and how it’s supporting the accounting software.

What is Output TAX?

A business’ output tax is the Value Added Tax (VAT) that is charged on supplies of goods and services supporting both the businesses and consumers. There are various VAT rates that can apply to taxable supplies, and some suppliers are exempt from VAT altogether.

How to Calculate Output VAT : Example: If a business sells goods for AED 300, the Output VAT would be AED 15.00 (300 x 5%).

What is Input TAX?

The purchase of goods and services that are liable in VAT are the Input TAX. When a business makes a purchase, the price quoted might be either VAT –exclusive, in which case VAT will be calculated and added separately, or VAT- inclusive, in which means the total price already includes the VAT amount.

How to Calculate Input VAT: Example: If a business purchases goods worth AED 150 with a VAT rate of 5%, the Input VAT would be AED 7.50 (150 x 5%).  

VAT input and VAT output are the crucial factors in determining the VAT liability owned to the FTA or that FTA owns you. In UAE, the VAT rate is currently is 5%.

VAT Accounting Software

Software for accounting in UAE as an imperative solution for any business to empower financial health and maintain stability. Any small, medium or large scale company can utilize the VAT accounting software as it is simplified, systematic and user-friendly software. It can be custom made to meet the varying demands of different organizations. It helps the ERP solution to help firms to manage their transactions digitally and document it in the central sever for real-time analysis and evaluation.

The key goals for VAT accounting software are;

• Instant overview of financial data
• Easy to use platform
• Real time synchronization
• Drill - down Data
• Business Insights
• Centralized Server
• Affordable and intuitive
• Easy Bank Reconciliation
• Interactive alert and notification system

The Accounting Software features can be easily integrated with other operational modules and applications. Some of the software module features are:

• HR & Payroll
• Budgeting and forecasting
• Billing and invoicing 
• Project accounting
• Asset Tracking
• Chart of Accounts
• Profit & Loss Accounts
• Cheque Printing
• Contracting
• Manufacturing
• Trading
• Sales & Purchase

Benefits of Accounting Software

Companies adopting accounting software typically realize many befits, such as increased operating efficiency, data accuracy and visibility into financial information. Most accounting software’s can accommodate and streamline day-to-day bookkeeping tasks.

• Extensive reporting
• Ready to audit files
• Manage payment systematically
• Automate regular accounting tasks
• Extended user control
• Multi-level Accounting

VAT Consultation

A VAT consultant is a professional who specializes in helping businesses understand and comply with Value Added Tax regulations, and optimize their VAT entitlements. When owning small to medium business, managing your finances, and juggling multiple priorities, it can be tough to stay on top of everything. That’s’ where the VAT consultant comes in handy. Few reasons as to why you have to consider hiring a VAT consultant for you businesses:

1. Navigate Complex VAT regulations
2. Maximize Your VAT refund
3. Improves the financial management and planning

Need Expert help you select the software to boost your business – We are here to GUIDE YOU

Penieltech - the official Accounting software dealer in United Arab Emirates provides the best in class for VAT Ready ERP Solution to streamline accounting and VAT. Feel free to contact us anytime for support, guidance or assistance at +971 4 239 8571 or send us an email at [email protected].

FAQs

• Who should register mandatory for VAT in UAE?

A business must register for VAT if the Taxable supplies and imports exceed the mandatory registration. Upon registration, a tax registration number will be issues to business by the FTA.

• Which document to be submitted by a business as a proof of turnover for VAT registration?

The following documents are required while submitting as a proof of turnover for VAT registration;

• Valid trade license identification
• Passport and Emirates ID copies of the authorized signatory
• Proof of authorization for the authorized signatory

• How long does it take to get a VAT certificate in the UAE?

Getting a VAT number in the UAE usually takes about 20 business days.

• Is TRN and VAT the same?

Yes, TRN and VAT is the same and is also known as Tax Registration Number and Value Added Tax. TRN Number is a 15- digit number, assigned by the FTA to the registered businesses.

• What is the difference between Zero rate supplies and Exempt supplies?

The key difference between zero rate supplies and exempt supplies is that the suppliers of zero rated goods and / or services can be claimed input VAT during the purchase, and for the exempt supply we can’t claim input VAT during the purchase, nor can you issue a tax invoice for the sale of exempted goods or services.