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Abu Dhabi, UAEMonday 24 September 2018

VAT q&a: 'Do I have to use the FTA's approved software provider to make my tax return?

The Fujairah reader is confused about which accounting program to use

1. Permanent home licences that will except the requirement of having an office or work space for two years. Getty Images
1. Permanent home licences that will except the requirement of having an office or work space for two years. Getty Images

I’ve heard people talking about Federal Tax Authority accredited accounting software and can see on the FTA website that there are only four software providers listed, with most of the well-known names missing. Is it mandatory to use one of these accredited providers? I’ve been happily using an unaccredited accounting package since January and don’t want to change it unnecessarily. LA, Fujairah

The Decree Law and Executive Regulations do not prescribe that a business must use accredited accounting software to record their financial transactions and you have rightly noticed that many of the best known and trusted financial software providers are missing from the list. As far as I am aware there is also no mandatory requirement for software providers to become FTA accredited.

One of the key requirements is that it can produce a VAT return file that integrates with the FTA’s e-Tax portal and automatically populates the tax return. This means you do not need to manually input numbers from your VAT reports into the online return, and may reduce the risk of errors in the submitted return.

However, what is most important is that your accounting software of choice meets your business needs and fully complies with the VAT legislation in terms of producing compliant tax invoices and credit notes. Further, that it captures key data to facilitate submission of your quarterly returns and is also capable of being audited in detail by the FTA should they wish. The FTA require that VAT records are retained for a minimum of five years so the system should be effectively backed up and archived for the required period. I suggest you read the sections in the Legislation and Executive Regulations covering tax invoices and credit notes , and record keeping. These start at articles 65 and 78 of the Decree Law, and articles 59 and 71 of the Executive Regulations. As long as your chosen accounting system allows you to fully adhere to the FTA requirements there is no issue with it not being accredited

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I own and run a small consultancy business and do the bookkeeping myself. I read through the Decree Law and Executive Regulations as I wanted to ensure I was accounting for VAT properly but I still had several queries relating to the export and location of my services. I wrote to the FTA but received a reply suggesting I read the Law and Executive Regulations, which I had already done. Are there any options, other than hiring a tax agent to get my queries resolved? MA, Abu Dhabi

As well as the Decree Law and accompanying Executive Regulations, the FTA have already issued lots of really useful and readable guides that can be found on their website www.tax.gov.ae. The guidance is spread throughout the site, so do have a look under every tab to see if you can find the information you need.

The “Big four” accountancy firms also regularly issues guides and articles on their websites, which I’ve personally found very informative.

If you still can’t find the answer to your specific queries you should take a look at the very recently issued FTA Clarification User Guide. The guide gives details on the process by which you can ask the FTA for technical clarification on specific VAT matters. The guidance is very specific on who can ask for clarification and what can be asked. There is a form to complete and it must be accompanied by a formal letter setting out the issues in detail.

They rightly expect that you have already analysed relevant tax law, regulations and guidance and the issue should not have already been addressed in their published material. You have to include facts of the matter, the question you want clarified, legal references (which are the relevant articles in the decree law and executive regulations), your current view and any alternative treatments you think may apply. The FTA have indicated that their reply make take up to 40 working days so if the query is time critical then this may not be the best option.

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Our business supplies goods to large retailers who have certain rights to return products not sold. We supplied goods in December 2017, which the retailer now wants to return and we need to issue a credit note to cover this return. Should the credit note include VAT if the sale of the goods in December were without the tax? NM, Dubai

If you can specifically link this return to goods you supplied in December, that were sold without VAT, then you should not include it on the credit note. If you have supplied any of the same goods in 2018 with VAT, then you should assume it’s these later goods being returned and should therefore include the tax on the credit note.

Lisa Martin, a chartered accountant with over 20 years commercial finance experience, is the founder of accounting, auditing and VAT consultancy, The Counting House. Email any VAT queries to pf@thenational.ae

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