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VAT Guide for Small Businesses

Record keeping tips for small businesses

How startups and small businesses can keep record efficiently?


Go cloud


Use online accounting software that is accessible from any device with an internet connection at any time. All your team can have access to enter transaction on the go and upload supporting documents in a centralized cloud database that is automatically backed up.

Cloud software can integrate with a whole ecosystem of business apps, so you can capture VAT records from emails, scanning apps, and many other third-party apps.

How to keep records for VAT purposes?

How businesses should keep, archive, and retrieve records?


Businesses are not required to keep their records in any specific way or format. But they must be kept in a suitable way that enables the FTA to easily check the validity of the data which has been used to complete a tax return.


Records must be readily available


Records can be kept on or off-premises, or even on the cloud. Each business can choose their own way to store their records, however, they are responsible to make those records available in a legible format and in a timely and efficient manner when requested by the FTA

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.

Types and format of tax invoices in the UAE

There are two types of Tax Invoices, full tax invoice and simple tax invoice. Simple tax invoice has less requirements in terms of the format and is used in the following situations:

  • Where the buyer is not registered for VAT in the UAE

  • Where the buyer is registered for VAT in the UAE, but the total value of the invoice does not exceed AED 10,000.

In all situations other than the above a full tax invoice must be issued.

It worth mentioning that issuing a full tax invoice instead of simple tax invoice is optional. The seller may choose to issue a full tax invoice to all customers including non-VAT registrants.

Who must issue a tax invoice?

Seller-created tax invoice


Normally, the supplier of goods or services is liable to issue a tax invoice, however, it can be issued by the buyer or the agent of the supplier in certain situations.

What is a Tax Invoice?

As per the UAE VAT legislations, a tax invoice is a written paper or electronic document which records the details of a taxable supply (goods or services) which has been made. Tax invoice is important for both sellers and buyers.


Issuing a valid tax invoice is important for suppliers as it will determine the tax period in which the VAT charged should be accounted for and paid to the FTA.


Receiving a valid tax invoice is important for buyers as it will serve as the primary evidence for recovering the VAT incurred as input tax.

Useful tips for VAT registration

Seek a professional consultation


We strongly recommend that you seek a professional consultation from a Tax Agent to help you with the tax registration. I have seen many cases of adverse implications due to wrong applications like miscalculation of the registration threshold (quite common), missing the deadline of registration, and failing to understand the different of choices, which results in delayed approval.

If you need to do it yourself, please read FTA’s detailed guide (REGISTRATION, AMENDMENTS & DEREGISTRATION).

How do I register for VAT?

You can register online and sign up at www.tax.gov.ae, E-service section.

When do I have to register for VAT?

Mandatory Registration


A natural person (individual) or a legal person (company) conducting business in the UAE will have to register for VAT if their non-exempt revenues exceed AED 375,000 over the previous 12 months.

What businesses should do before registering for VAT in the UAE?

Embed VAT in your business plan


Start-ups and newly established businesses must embed the VAT into their business plan, strategies, policies, and processes. It is essential that they well understand the implications of the VAT and make every effort to align their business model to the Federal Tax Authority (FTA) compliance requirements.

Exempt and outside the scope supplies

Exempt supplies


No VAT is charged in respect of exempt supplies, however, they are not “taxable supplies” which mean that the supplier cannot recover the VAT incurred on expenses related to exempt supplies.

List of exempt supplies:

  1. Financial services: exchange of currency, LC, debt security, equity security, loan, operation of deposit or saving AC, dividend.

  2. Residential building (other than the first supply)

  3. Bare land

  4. Local transport (public)

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