Record keeping requirements for VAT
All tax registered, individuals and businesses, are required to maintain certain business records for a specified period of time. This article summarizes the type of records and the time periods for which they must be retained.
Record keeping is essential and will help businesses to pay the correct amount of tax. It also enables businesses to provide FTA’s requirements for a tax compliance check or a tax audit in proper and timely manner.
Overall, the record keeping purpose is to demonstrate a sufficient audit trail so a VAT amount can be traced from a source document, for example an invoice, through to the final tax return.
What records must be kept?
A VAT registered individual or company is required by law to keep all of the following records:
Records of all supplies (sales) and imports of goods and services
All tax invoices and alternative documents received (expenses and purchases bills)
All tax invoices and alternative documents issued (sales)
All tax credit notes, and alternative documents received
All tax credit notes, and alternative documents issued
Records of goods and services that have been disposed of or used for non-business purposes, detailing the VAT paid on those goods and services
Records of goods and 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.
VAT account records
Output tax due on taxable supplies (VAT on sales)
Output tax due on taxable supplies accounted for via the reverse charge mechanism (reverse charge mechanism is applicable to import of services and to B2B gold trading)
Output tax due after the correction of any errors or adjustments
Input tax recoverable on supplies or imports (VAT on expenses, purchases, and import)
Input tax recoverable after the correction of any errors or adjustments.
Accounting records & statements
Balance sheet and profit and loss
Records of wages and salaries
Records of fixed assets
Inventory records and statements (including quantities and values) at the end of any relevant tax period and all records of stock-counts related to inventory statements.