All taxable persons are required to retain certain business records for a specific period of time. The maintenance of records will enable businesses to pay the correct amount of tax.
The following records are to be kept by a VAT registered person:
- All records of supplies and imports of goods and services
- All tax invoices and alternative documents received and issued
- All tax credit notes and alternative documents received and issued
- Detailed records of VAT paid on goods and services that have been disposed of or used for matters not related to the business
- Records of goods are services purchased for which the input tax was not deducted
- Records of exported goods and services
- Records of adjustments or corrections made to accounts or tax invoices
A VAT registered person must also maintain the following records in addition to the above mentioned ones:
- Taxable supplies’ output tax due
- Output tax due on the taxable supplies accounted for via the reverse charge mechanism
- Output tax due after the correction of any errors or adjustments
- Input tax recoverable on supplies or imports
- Input tax recoverable after the correction of any errors or adjustments
Businesses must also keep accounting records and documents that are related to their business activities, which include:
- Balance sheet and profit and loss accounts
- Records of wages and salaries
- Records of fixed assets
- Inventory records and statements at the end of any relevant tax period and all records of stock-counts related to inventory statements.
It is required to maintain the required records for a minimum of 5 years by the taxable person after the end of the tax period to which they relate.
Before the expiration of the 5 year term, in some cases, the FTA might ask the person to retain the records for a further period not exceeding 4 years, like:
- If the taxable person’s tax obligations are subject to a dispute with the FTA
- If the person is subject to an ongoing tax audit
- If the FTA has given a notice to the person that it intends to conduct a tax audit before the expiry of the 5 year record retention period.
A taxable person must retain the required records for a period of 15 years after the end of the tax period, if the person owns real estate.
There is no specific format or way to keep the records, but they must be kept in a way that will allow the FTA to easily check the information. Records must be available readily in a legible format on request by the FTA. If you have any doubt in record keeping, call us on 00971-4-331-2332