Expert insight: How to get VAT-savvy
If VAT is not implemented properly, it is likely to impact everything from cash flow to operations. Mansoor Sarwar, regional director for technical services at Sage Middle East, shares five useful tips.
1. Test your system: Whether you’re using an accounting system or calculating VAT manually, test your system by creating dummy sheets and invoices. All invoices and credit notes must reflect VAT charges and show if supplies are zero-rated supplies or exempt. VAT is also to be charged on advance payments.
2. Train your staff: Getting your staff to understand the basics of VAT is important, especially if you want to reduce the risk of incurring penalties with regards to returns-filing, refund claims or reverse charge mechanism (RCM). Accredited tax experts can help.
3. Automate wherever possible: SMEs should consider getting VAT-compliant and FTA-accredited accounting software to free up business owners’ time to focus on developing their business. There is accounting software for cheap monthly subscriptions.
4. Get reporting ready: Besides extending the deadline for VAT registration until April 30, the FTA also relaxed the timeline for SMEs to file VAT returns on or before June 28. It released a detailed return-filing guide to offer companies greater direction on filings.
5. Manage cash flow: Whether you owe tax or want a refund, regularly analyse your financial statements and forecast three months in advance to identify potential cash shortages. FTA will take 20 working days to review refund claims, and five to complete refund payments.