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Dubai: Managing value-added tax (VAT) is a crucial, complex part of a business process that requires an organisation’s full understanding. According to Tally Solutions, a leading international accounting and compliance software provider, there are various easy ways to achieve effective and efficient VAT management techniques to improve a company’s compliance level.
“Proper understanding of the law and adhering to the rules can help businesses enhance their operational efficiency and profitability prospects. While businesses can get support of a professional accountant, concerned people within an organisation should also be aware of the reforms needed to better operate and ensure growth under this environment,” said Vikas Panchal, Business Head, Tally Solutions in the Middle East.
Mr. Panchal added: “In the GCC region, where countries are just starting to implement their own respective VAT laws, it is important to know how to establish a better VAT management system to sustain their competitiveness as well as further boost their reputation as a reliable corporate citizen through correct compliance with the law.”
Mr. Panchal cited some of the top five easy measures that can be adopted by a business to better manage its VAT compliance.
The first step is putting in place a practical and easy-to-understand record keeping mechanism within the business. This efficient system allows companies to ensure that ‘VAT on Sales’ and ‘VAT on Purchases’ are properly documented, hence, making it easy for the firm to correctly compute the amount due to the government.
Additionally, under the efficient record keeping system, it is expected that copies of documents such as tax invoices, receipts, and expenses, among others, are properly kept for accurate filing of VAT returns. Companies can also easily pull out the files in case of government enquiries.
Second is voluntary registering for VAT even if the business is still below the required annual turnover. This move is especially critical for organisations that are eyeing expansion in the future during which their turnover will by then meet the required turnover level for registration. According to Mr. Panchal, it will help such businesses prepare early on and become familiar with the processes under the VAT regime.
Third, knowing and understanding the intricacies of VAT reclaims is also a practical measure to optimize VAT management. There are numerous expenses or activities that the law allows businesses to reclaim back VAT – an opportunity that will help an organisation’s overall bottom line and reduce their tax burden.
The fourth one is timely filing of VAT returns to avoid attracting hefty penalties.
Automating relevant business processes another crucial and important thing that businesses need to do. This is done by migrating to a more VAT-compliant accounting system, allowing businesses to effectively and smoothly charge VAT from the consumers and reclaim the same according to the provisions of the law. The automated accounting structure is critical to adopting more compliant and more contemporary accounting processes and procedures. In addition, investing in advanced technology infrastructure is instrumental in significantly minimizing human errors.
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