Record Keeping
Books and records you must retain for VAT compliance.
Record Keeping
Record keeping is a fundamental requirement under UAE VAT law and plays a crucial role in ensuring transparency, compliance, and accurate tax reporting. Every taxable person is legally required to maintain specific business records for defined periods to support VAT calculations and filings. These records enable businesses to determine the correct tax liability while also allowing the Federal Tax Authority (FTA) to monitor compliance, conduct audits, and assess additional tax where necessary. Without proper documentation, businesses may face difficulties in substantiating their VAT positions and may be exposed to penalties.
General Requirements
What Records Must Be Kept?
A VAT-registered person is required to maintain a comprehensive set of records that clearly reflect all business transactions and VAT-related activities. These include records of all supplies and imports of goods and services, as well as all tax invoices and alternative documents received and issued. Businesses must also retain tax credit notes issued and received, along with records of goods and services that have been disposed of or used for non-business purposes, including details of the VAT paid on such items.
In addition, businesses are required to maintain records of purchases where input tax was not claimed, as well as records of exported goods and services. Any adjustments or corrections made to accounts or tax invoices must also be properly documented.
Beyond transactional records, a VAT-registered person must maintain a dedicated VAT account or record summarizing key tax elements. This includes output tax due on taxable supplies, output tax accounted for under the reverse charge mechanism, and any adjustments to output tax. It must also include input tax recoverable on purchases or imports and any subsequent corrections made to such input tax.
Furthermore, VAT compliance requires alignment with general accounting record-keeping. Businesses must therefore maintain financial records such as balance sheets and profit and loss statements, payroll records including wages and salaries, fixed asset registers, and detailed inventory records. Inventory records must include quantities and values at the end of each tax period, along with supporting stock-count documentation.
Maintaining all these records ensures a clear audit trail, allowing VAT amounts to be traced from original source documents—such as invoices—through to the final tax return submitted to the FTA.
For How Long Should Records Be Kept?
As a general rule, all VAT-related records must be retained for a minimum period of five years after the end of the relevant tax period. This retention period ensures that businesses can support their VAT filings if reviewed by the FTA at a later stage.
However, in certain situations, the FTA may require records to be retained for an extended period of up to an additional four years. This typically applies where there is an ongoing tax audit, a dispute with the FTA, or where the FTA has issued a notice of audit before the standard retention period expires.
For businesses dealing with real estate, the retention requirement is significantly longer. Records relating to real estate transactions must be maintained for a period of 15 years, reflecting the long-term nature and higher value of such assets.
Archiving and Retrieval Requirements
While there is flexibility in how records are stored, businesses must ensure that all records are maintained in a manner that allows the FTA to easily verify the information used in VAT returns. Records can be stored in physical or electronic formats, including original documents, scanned copies, or other reliable methods of data preservation.
Regardless of the storage method, records must be readily accessible and legible when requested by the FTA. This is particularly important during tax audits, where businesses must be able to provide relevant documentation promptly and efficiently.
Although records do not need to be physically kept on business premises, they must be retrievable without delay. The key requirement is not the format or location of storage, but the ability to present complete and accurate records in a timely manner whenever required by the authorities.