How Can Businesses Manage Stock in Line with the Rules?
07 Sept, 2023 / Haroon Juma / ERP & E-Commerce Integration
Why is Managing Stock Records of Greater Importance?
Managing stock reporting with associated documentation is of increased significance uner the new Corporate Tax regime. With the introduction of Corporate Income Tax, any deductible expense including purchasing and managing stock is subject to specific obligations for UAE businesses. The correct stock management and associated records is a defined requirement under Cabinet Decision No. (74) of 2023 on the Executive Regulation of Federal Decree-Law No. (28) of 2022 on Tax Procedures.
In this article, we discuss the benefits of proper stock management procedures, its ability to discharge compliance obligations, and the potential for administrative penalties.
Why Stock Management & Inventory Operations Matters
Keeping track of the stock in your business can be complex. To maximise business profitability, you need to manage a wide range of factors including:
- What stock is selling fastest?
- How much is needed to meet demand?
- How much stock you have?
- Where the stock is
- When to order more based on sales performance
- When items expire
- Additional costs such as shipping and customs
Errors can be costly and lead to loss of sales and brand loyalty and business operating ineffiently experience common problems including:
(1) Overstocking and understocking leading to warehousing problems, costs, and missed sales respectively,
(2) Lack of visibility on real-time data to make immediate actions on potential stockouts,
(3) Discrepancies and errors with reporting affecting the financials of the business, and
(4) Operational inefficiency where staff spend more time with repetitive manual procedures that increase costs and are prone to error.
A good stock management is an effective way for businesses to address these issues. Once you can monitor each product, you can then track your inventory at a granular level helping to identify the optimal solution. Data-driven insights are essential to making the right and timely decisions for your business.
UAE New Tax Procedures Law & Businesses Compliance
Under Cabinet Decision No. (74) of 2023 on the Executive Regulation of Federal Decree-Law No. (28) of 2022 on Tax Procedures and its administrative penalties set by the FTA, effective from 1st August 2023.
In the latest FTA Tax updates, it requires businesses to have proper maintenance of payments and receipts, purchases and sales, inventory records (with quantities and values), and all records of stock counts related to Inventory statements. This additional requirement is mandatory and imposes penalties for non-compliance.
As specified in the Cabinet Decision No. (75) of 2023, failure to maintain records and other information has a penalty of Dhs10,000 for every violation and Dhs20,000 in each case of repeated violation within 24 months. Moreover, a penalty of Dhs5000 will be imposed for failure to submit data, records, and documents related to Tax in Arabic to the authority upon request.
The Federal Tax Authority requires clarity on your stock levels and proper records on your zoho inventory. Discrepancies and inaccuracies in sales and purchase audits could result in certain penalties for your business. To prevent this, a systematic approach to the inflow and outflow of your stocks should be implemented.
Efficient Stock Management with Zoho Inventory
As a competitive tool, an efficient stock management system is not just a benefit, but rather a necessity. Any business in a dynamic and competitive market must manage its resources, track zoho inventory, and identify discrepancies in inventory to reduce revenue loss and increase internal controls.
Zoho Inventory provides diverse features to help small and medium companies keep track of stock levels across multiple channels. What can appear to be complicated is now simpler for businesses through implementing automation and functionality to control zoho inventory from purchasing, stock management, and shipping to sales in one integrated process.
The platform reduces potential human error and cuts manual tasks, so you can focus more on your customers and market. Most importantly, robust reporting and compliance capabilities satisfy the new FTA Tax updates and mitigate your business risk of facing penalties.
The key to implementing a platform is a detailed understanding of the capabilities, opportunities, and expertise in deploying a solution supported by a strong training plan. Without this, your business may take longer or fail to materialize the full benefits.
Technology and automation deliver business benefits, yet it also comes with its own set of challenges.
For instance, your business needs to adopt and embrace the technology. It must operate the platform correctly, users must be granted the proper access, know how to operate the functionality and only the right levels of authority have visibility on sensitive information.
A sound understanding of the targeted outcomes, platform functionality and planning is essential. In our earlier blog, further insights on how businesses fail such projects is discussed.
At SimplySolved, we understand how to deliver successful projects. We focus on providing best practices and expertise to deliver solutions that scale with your business. Our wide ranging expertise from finance to IT, complemented by our FTA Tax Agency, ISO 9001 & 27001 certifications, enable us to deliver business outcomes that improve your performance, efficiency and ensure FTA compliance.
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