What are the key requirements for accounting software to be certified as "Tax Accounting Software" by the Federal Tax Authority (FTA) in the UAE?

With the introduction of VAT on January 1, 2018, bookkeeping software has become crucial for businesses to comply with VAT requirements. These programs facilitate the recording of monthly or quarterly VAT returns, maintaining books of accounts for 5-10 years, issuing tax invoices/credit notes, and generating audit files (FAF). Whether your business handles thousands of transactions or just a few, bookkeeping software ensures efficient, fast, and error-free VAT return filing. To ease taxpayer compliance, the Federal Tax Authority (FTA) has established stringent criteria for software to qualify as "Tax Accounting Software."

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What is Tax Accounting Software?

Tax Accounting Software not only meets business requirements like managing accounts payable, accounts receivable, inventory management, order management, and billing but also assists in transforming accounting data into tax reporting. For example, transactions recorded in the software help generate VAT-compliant invoices, detail sales and VAT return information into VAT Return Form 201, and produce various other reports like Audit Files (FAF) as required by law. Additionally, it supports business needs by creating sales registers, accounts receivable, and other MIS reports.

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In essence, tax accounting software is designed to automatically generate tax reports from accounting records with minimal effort. It fully meets business needs and complies 100% with VAT requirements.

Key Requirements for Tax Accounting Software Issued by FTA

To comply with FTA requirements, tax accounting software must automatically generate FTA-compliant Audit Files (FAF), VAT returns, and VAT-compliant invoices and credit/debit notes. It should also include various non-functional requirements to ensure comprehensive compliance and ease of use.

Key Requirements for Tax Accounting Software

Tax accounting software must meet several key requirements:

1. Automatically generate non-editable VAT return records in the FTA-specified format with minimal user effort.
2. Enable users to create complete and accurate Audit Files (FAF) that are readable by the FTA.
3. Support the issuance of tax invoices, credit/debit notes, and self-billed invoices that comply with VAT laws.
4. Include comprehensive documentation, such as user manuals and system-based help records, to assist both internal and government auditors, as well as users.

Ensure that only authorized users can access and process data based on granted permissions.

Implement password control features such as mandatory password change upon initial login, minimum password length, password complexity requirements, password history management, etc.

Incorporate functionalities to prevent, detect, and correct incomplete or invalid data to ensure completeness and accuracy of VAT returns and FAF records.

Incorporate controls to prevent unauthorized editing and deletion of entries.

The tax accounting software should include provisions for data backup and restoration as needed.

The system should support creation of multiple user profiles with different access rights.

The system should be capable of generating formatted reports on a weekly, monthly, quarterly, and annual basis.

These are some of the key requirements that tax accounting software must meet to obtain certification or accreditation from the FTA.

The FTA conducts periodic assessments of VAT Accounting Software according to issued guidelines. Software meeting the requirements is accredited by the FTA as 'Tax Accounting Software' and listed in the FTA's Tax Accounting Software Register (TASR).

It is highly recommended for businesses to use tax accounting software certified or accredited by the FTA. This ensures automation of all tax-related duties such as record keeping, payments, filing returns, etc., saving businesses time and reducing compliance costs.

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