Accounting and Finance

Basic Mechanics and Accounting for VAT

Why Attend

On the 1st of January, 2018 a common Value Added Taxes (VAT) framework was implemented across KSA and UAE. This course will allow you to provide the necessary direction to your accounting, finance, IT, business development and other concerned departments for the successful implementation of the VAT. We will help you recognize the terms, principles and basic mechanics of the VAT as they will be adopted and implemented in the GCC. In addition, this course gets you prepared by upgrading the skills of your accounting staff to fully understand and properly account for the VAT. From invoicing to recording entries and preparing VAT return forms, this course provides an overview of the accounting treatment of the VAT according to the various types of goods and services.

Course Methodology

The course uses a mix of interactive techniques, such as brief presentations by the consultant, application of theories and group exercises to exchange experience and apply knowledge acquired throughout the course.

Course Objectives

By the end of the course, participants will be able to:
  • List major terms of VAT such as a taxable person, input VAT, output VAT and exempt supplies 
  • Recognize the effect of VAT adoption on their company’s financial statements
  • Explain how to account for VAT on purchase and sales of goods or services whether the entity is registered in VAT or not
  • Use the company’s trial balance to fill up a VAT return
  • Formulate a preliminary assessment of impact of VAT adoption on operations and accounts
  • Assess impact of VAT on selected industries

Target Audience

Staff accountants, senior accountants, chief accountants, accounting managers, controllers, internal auditors, tax consultants, tax preparers, IT professionals, business development managers and other professionals in different company functions.

Target Competencies

  • Understanding VAT
  • Applying VAT
  • Accounting for VAT
Basic Mechanics and Accounting for VAT

Course Outline

  • Introduction and basic mechanics of VAT
    • Basic mechanics of VAT
      • Definition of VAT
      • How VAT works: input and output VAT calculations
    • Persons and entities subject to VAT
    • Different types of supply
      • Taxable supplies within the scope of VAT: goods and services
      • Exempt supplies outside the scope of VAT
      • Zero-rated supplies
      • Deemed supplies
    • Place of supply: local versus export
    • VAT on sales charged on delivery, invoice or payment date
    • When to record and recover VAT on goods and services received
      • Local delivery
      • Imported goods and services
    • Taxable amount: which amount is subject to VAT
      • Discounts and free goods treatment
    • The party liable to pay VAT
  • Accounting for VAT 
    • Issuing the VAT invoice
    • What does a VAT invoice look like
    • Contents of an invoice
      • Difference between cash business and sales on account
    • VAT records and documentation to be maintained
    • Accounting entries for VAT
      • Local purchases of goods and services
      • Imported goods and services
      • VAT on expenses
      • Self-supply of goods and services
    • VAT on sales
      • Discounts provided to customers
    • Interest on late customers’ payments
    • VAT entries for bad debts write-offs
    • VAT entries for down-payments
    • Treatment of damaged goods
    • VAT on leases taken: operating and finance leases
    • Purchases and sales of fixed asset
    • Entities providing non-vatable activities
    • Trial balance accounts needed to complete a VAT return
    • Expected format of a VAT return
  • Issues to be considered and addressed by industry
    • Retail
    • Automotive
    • Meetings, incentives, conferences and events
    • Financial services and insurance
    • Real estate and construction
    • Tourism
    • Oil and gas
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