Before you can enter the company sales and purchasing documents, check that the VAT functionality is correctly configured.
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Before you can enter the company sales and purchasing documents, check that the VAT functionality is correctly configured.
1. Choose Between Single-Country Tax Accounting and Multi-Country Tax Accounting
Where: Administration > Settings > Taxes
If your organization consists of multiple entities that operate in different tax legislations, you need to configure the VAT functionality in such way that each entity can comply with the tax laws of the country of its tax registration.
You have to choose Single-Country mode of Tax Accounting if your organization consists of a single entity or if all the entities operate and file tax returns in the same country. In this case, you need to specify the country of tax registration and then select the tax options applicable to the organization from the list of tax options available for the selected country of tax registration.
You have to choose Multi-Country mode of Tax Accounting if your organization consists of multiple entities and different entities operate and file tax returns in different countries. In this case, you need to select all the countries where the entities operate and then select the all the tax options applicable at least to one of the entities from the list of joint list of tax options available for the selected countries of tax registration.
1. Make sure the VAT functionality is turned on
Where: Administration > Settings >
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Taxes
Make sure that the VAT Accounting check box is selected.
In the Output VAT Transaction Method field, one of the following options is selected:
- Exclude from Revenue: To not include the output VAT amounts in revenue
- Include in Revenue: To include the output VAT amounts in revenue
Enable Tax Groups
This option (if selected) enables the functionality of group taxation. Some of your entities if registered as a tax group can file
consolidated tax returns on behalf of all group members. For example, several entities under common ownership that use a single consolidated accounting system may be registered as a tax group and will be treated as a single taxable person for VAT purposes.
A tax group must include one Representative Member that will file VAT Returns on behalf of other (ordinary) group members. All entities of a tax group must use the same TRN (Tax Registration Number). For more information, refer to Overview of Tax Groups.
Tourist Tax Refund
Select this option if your organization has tourists as customers. The option enables the functionality that helps you process tourist request for refunds on the Value Added Tax (VAT) incurred on their purchases made during their stay in the UAE. For more information, refer to The Tax Refund for Tourists scheme.
Tracking of Zero-Rated and VAT-Exempt Purchases
Select this option to be able to track zero-rated and exempt purchases and view the corresponding data in VAT Return and other reports. For using this option, no additional configuring is required.
Tracking of Out-of-Scope Sales
Select this option if some of sales are outside of the scope of VAT according to the legislation of the entity's country of tax registration. If this option is selected, you need to review the VAT Accounting by Emirates check box default list of Out-of-Scope Reasons and add new reasons if needed.
Tracking of Out-of-Scope Purchases
Select this option to track the supplies from companies that are outside of the scope of VAT for the country of tax registration. If this option is selected, you will need to specify the default emirate for each entity of your company, for each customer and supplier. After that, when entering sales and purchase documents, review the default list of Out-of-Scope Reasons and add new reasons if needed.
VAT Accounting by Emirate
This option appears if you selected UAE as a country of Tax registration for any entity. You don't need to select this option if your business in UAE is limited to only one emirate.
Select this option if your business in UAE expands to multiple emirates and you need to file VAT Returns by emirate. With this option selected, you will need to specify the emirates associated with each transaction. The data in reports will also be arranged by emirate.If your company needs to include tax-exempt and standard-rated supplies in the same documents, select the Advanced VAT Calculation check boxsales and purchase transaction. Additional configuring for this option includes specifying default emirates for each entity of your company, each customer and supplier.
Enable E-Invoicing for KSA entities
This option appears if you selected Saudi Arabia as a country of tax registration for any entity. Select this option if at least one of the entities operates in Saudi Arabia and meets the requirements for E-invoicing. You will need to configure a connection to the Fatoora portal.
2.Types of taxes
Where: Taxes > See Also > Tax Types
Note that the list of taxes is predefined. By default, Make sure that VAT is available on this list of taxes.
3. VAT rates
Where: Taxes > See Also >
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VAT Rates
The Review the VAT rates available. Generally, the VAT rates that are in effect in UAE are predefined:
- Standard Rate (5%)
- Zero Rate ( 0%)
- VAT-Exempt (0%)
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the countries of tax registration are predefined. Although, you can add a new rate if needed.
4. Creating Tax Groups
Where: Taxes > See Also > Tax Groups
If the Enable Tax Groups option is selected, you can create one or more tax groups. Tax groups can be created at any time - the functionality allows you to set the start date which becomes the end date when you need to re-group the entities in another way. for details, refer to Adding a Tax Group.
5. VAT settings for the Entities
Where: Accounting > Master Data > Entities
On the Entities form, for each entity, open the Tax Accounting tab and check the following:
- The VAT
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- Taxpayer check box is selected.
- The History of Changes link is available. The link appears after you enter in the Apply From field the date starting which VAT should be applied and click OK.
- The tax registration number (TRN) for this entity is specified.
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- in the
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- VAT Rate field, the default
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- VAT rate is
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- specified.
- The Prices include VAT check box is selected if the entity defines the prices with VAT included.
- If the entity's tax registration is UAE and the VAT Accounting by Emirate option is selected, in the Emirate field, select the default emirate.
- If the entity's tax registration is Saudi Arabia and the Enable E-Invoicing for KSA Entities option is selected, select the Integration with Fatoora portal check box if the entity meets the corresponding requirements.
For more information, see the Entities topic.
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6. VAT settings for
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customers and suppliers
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Where: Sales > Master Data > Companies
For each company that is a customer or supplier, check the VAT settings on the Tax Accounting tab:
- The VAT Taxpayer check box is selected.
- The tax registration number (TRN) for this company is specified.
- The Prices include VAT check box is selected or not depending how it was set with the company.
For more information, see the Companies topic.
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7. VAT Settings for Items and Services
Where: Sales > Master Data > Items
For each item and service, on the Accounting Parameters tab, make sure that the default VAT rate applicable to the item or service is specified.
The system is ready for VAT calculation and reporting
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