Understanding Records and Books of Accounts Required for VAT: FAQs

What records and books of accounts must be maintained for VAT?

A taxpayer should maintain the following records and books of accounts:

• Record of taxable supplies made and received 
• Records of import of goods and services
• Records of export of goods and services
• Tax invoices or other alternative documents related to sales and purchases of goods and services
• Credit notes, debit notes and other alternative documents received and issued 
• Records of goods and services allocated for non-business purposes, along with the tax paid for them
• Records of goods and services that have been disposed, along with the payment made for them
• Records of goods and services purchased for which input tax was not deducted.
• Records of adjustments and corrections made to accounts or tax invoices.
• Tax records that include the following information:
  • Tax due on taxable supplies
  • Tax due after adjustments or error corrections
  • Tax due on supplies where tax was paid under the reverse charge mechanism
  • Recoverable input tax on supplies and imports
  • Recoverable input tax after adjustments or error corrections

How long should I maintain VAT records?

Business owners should maintain their records and books of accounts for a period of at least 5 years from the end of the financial year to which they belong. The business owner, shareholders or partners should confirm that the books of accounts are being maintained as mandated by the FTA.

Records and books of accounts related to capital assets like machinery and furniture should be maintained for at least 10 years from the end of the tax period to which they belong.

Records related to real estate should be maintained for a period of at least 15 years from the end of the tax period to which they belong.

Where should I keep my VAT records?

The business owner should maintain their records and books of accounts in their head office for a period of at least 5 years from the end of the financial year of the business. They can also maintain an electronic copy of the original records and books of accounts. 

Will I be asked to produce any additional documents in case of an audit?

Besides the mandatory records and books of accounts, a business owner may be asked to provide additional documents like general ledger, annual accounts, VAT ledger, purchase day book, and invoices that have been issued and received. The business owner should keep an electronic copy of the original documents and records as mandated by the FTA.

According to the laws laid down by the FTA, business owners should maintain an accurate FTA Audit File (FAF) to be handed over to the tax auditor. An FTA Audit File (FAF) is a master file that contains all the necessary data to assess if a business is VAT compliant or not. If you’re using accounting software, it’s advisable to make sure that the software is capable of generating an FTA Audit File (FAF) when needed. Ideally, it’s generated during the tax return period in an invoice-level format and it should be in the (.csv) format. The FAF should contain the following information:

• Details regarding the firm: This includes company information like the Tax Registration Number (TRN), the name of the business owner in English and Arabic. If you choose to file your returns through a tax agency, then you should provide details like the Tax Agency name, Tax Agent’s name, Tax Agency Number (TAN), and Tax Agency Approval Number (TAAN).
• Supplier details: This includes the name and location of the supplier (by country or Emirate), and the Tax Registration Number (TRN) of the supplier, if applicable.
• Customer details:This includes the name and location of the customer (by country or Emirate), and the Tax Registration Number (TRN) of the customer, if applicable.