How VAT-ready Software Helps Small Businesses to Grow in UAE

Tally Solutions | Updated on: March 9, 2023

What is VAT accounting software?

Value Added Tax or VAT is a consumption tax applied on a variety of goods and services which must be paid by the customer. The tax is calculated and applied to goods and services starting from manufacturing to the sale. A VAT accounting software enables you to be VAT compliant along with allowing you to manage accounting for your business. For instance, VAT-compliant software allows you to manage your orders, books of accounts, accounts receivable, accounts payable, and so on. A reliable VAT-compliant accounting software solution must be accredited by the FTA or the Federal Tax Authority.

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3 Must-have features of VAT enabled software in UAE

A VAT accounting software in UAE must have these three vital features as per the FTA guidelines.

FTA Audit File

The FTA Audit File is also known as the FAF. According to the FTA, the file should be in .csv or comma separated value format. It must include three key details; company information, supplier and customer details, and transaction details. The company information should have the taxable person's name in English then in Arabic. It should have the TRN tax or registration number, tax agency name, TAN, tax agent name, and TAAN or Tax Agent Approval Number. The supplier and customer details must contain the customer location and supplier location. It should also contain their TRN number if applicable. The tax codes must be specified in certain cases to further provide details of supply.

The transaction details should contain all the invoice details. These details include the invoice value, invoice number, invoice date, VAT amount, and so on. The goods and services of your business along with the VAT code must also be mentioned in the FTA audit file. The adjustment details along with rounding off of figures if done by you must also be mentioned in the audit file. A software solution must be able to generate an FTA audit file automatically.

VAT return

The FTA has been specific that the VAT return file must be the same format as it has described and it must be filed online by businesses with the help of a VAT compliant software tool. The VAT return form is also called the VAT 201. The software must enable you to automatically generate the return form. You need to include details such as the tax payable, total purchases, output VAT, and total sales. You must also group supplies in various categories. These categories are reverse charge supplies, standard rated, intra GCC supplies, exempt supplies, and zero rate supplies. You will need to furnish your TRN number in the beginning before you do the other tasks and complete your return.

The VAT return must be filed to ensure you can claim tax credit later on. This is for those businesses which have already registered themselves under VAT or will be registering sometime soon. When you are registered under VAT, you are required to charge VAT. This applies to the supply of goods and services that are listed to be taxed along with the sales. The software solution must ensure it allows you to correctly and regularly file your VAT return with ease and no hassles.

VAT compliant invoices

The software solution must be capable of generating VAT-compliant tax invoices for your business. Businesses that have registered under VAT must issue a tax invoice on making a taxable supply. The tax invoice must contain the name, address, and TRN of the supplier. It must have a unique invoice number and the date of supply. The name, address, and TRN of the recipient must also be included in the invoice. In certain cases, the recipient may be accepting the supply in a different currency. In this case, the VAT amount must be converted to that currency and the rate of exchange must also be mentioned in the tax invoice.

Apart from these details, the details of the supply must be mentioned such as the description, quantity, rate, amount, discount if any, taxable value, VAT rate, and VAT amount. In the case where the recipient must account for tax, this must be specified in the tax invoice as per Article 48 of VAT law.

TallyPrime: The ultimate VAT compliant software

TallyPrime possesses all the top features that a VAT accounting software should have and more. Ever since its inception more than three decades ago, the software has been helping MSMEs make a real difference to the way they approach accounting and business management. December 2017 was the year when Tally launched its VAT-ready software in the UAE. Today, it has made a difference to thousands of businesses in the UAE. As an advanced accounting software solution, TallyPrime is simple to use and the automation ensures you can save on time and effort to focus on other aspects of your business.

Here is how TallyPrime works and why you should use it to generate VAT invoices, generate audit files, and file VAT returns.

Easy to set-up

TallyPrime lets you get started in a few minutes. All you need to do in the beginning is to enter a few details about your company to set it up and that’s it. For instance, you will need to enter TRN, business location, and VAT registration date. Once the setup is complete, you can enter transactions. TallyPrime automatically maps the data stored to VAT rules. It comes with the ability to create VAT-compliant invoices. You can even create invoices which utilize multiple tax types. You also get the freedom to generate bilingual invoices including POS invoices in Arabic and English. What if you only want the invoice in English? You can do that too!

Ensure error-free information

The software comes with automatic error detection and correction. This is very important in UAE to ensure there are zero errors when you are generating invoices and filing your VAT returns. Mistakes can be made when entering TRN, missing certain tax information, and mismatching information that you may have accidentally entered. When TallyPrime detects any errors, it lets you know immediately so that you can rectify those mistakes at the earliest. You are told what the exact mistakes are so you can check and enter the correct information.

Get insights from reports

TallyPrime stands apart from other software tools because it comes with a solid reporting feature. It can generate hundreds of reports and you can even generate one for VAT. This enables you to view all the computations and gives you the analysis for thoroughly understanding the taxes before you file your returns. This is helpful for all types of businesses, especially for those who are filing the VAT for the first time. You can find out about how much VAT needs to be paid and the refund details among other details. For importers, the RCM or the reverse charge mechanism is of high importance.

Safe and reliable software

TallyPrime is constantly evolving which means you never have to worry about it lagging behind. It already provides a host of features for complete business management but it is always up-to-date. This ensures you are always working on the latest version of the software tool. The software ensures high security of your business data to ensure no unauthorized access takes place. You can set up security access so employees get the access they need. The software provides data backup to ensure your data is always secure. As laws change, TallyPrime ensures those changes are reflected in the software.

TallyPrime includes other features such as inventory management, cash management, invoicing, and payroll processing. Try TallyPrime today and see your business transform with incredible insights!

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Compliance solutions right from invoicing to filing returns are just a click away