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To open the Settings: Taxes form, go to: Administration > Settings > Taxes.

Use the options on this form to enable the VAT accounting functionality. With this functionality, you will be able to specify the VAT settings for Entities and Companies and set the default VAT rates for Items. All these settings will be used for automatic VAT calculation in purchase and sales documents.

Note. Any changes made on this form are applied immediately.


The Settings: Taxes form

Select the VAT Accounting option to turn on the VAT functionality in the system.

Note. Once you have created any purchase or sales transaction with VAT, you will not be able to turn off this functionality.

Setting

Description

Output VAT Transaction Method

This setting defines how the output VAT is recorded in GL journal entries. Select one of the following options:

  • Exclude from revenue: To record the increase in revenue as a VAT-excluded amount.
  • Include in revenue: To record the increase in revenue as a VAT-included amount. Then, another transaction deducts the output VAT amount from revenue and post it to the dedicated GL account (Output VAT account).

VAT Accounting by Emirate

Select this option if your entity operates in the UAE, because each company must report all the VAT-related data by emirate even if the company operates strictly within one emirate only.
Selecting the option enables the Emirate field / column in the sales documents. If all the entity's transactions are within the same emirate, you can select this emirate as the default emirate in the entity master record.
Do not select this option if your entity operates in another country.

Enable Tax Groups

This option (if selected) enables the tax groups. Several businesses under common ownership that use a single consolidated accounting system may be registered as a tax group and treated as a single taxable person for VAT purposes, that is, they file consolidated VAT Returns. For details, see Overview of Tax Groups.

Tourist Tax Refund

Selecting this option enables the functionality related to tax refunds made to tourists. For details, refer to The Tax Refund for Tourists Scheme.

Tracking of Zero-Rated and VAT-Exempt Purchases

This option (if selected) enables the functionality that allows you to track zero-rated and exempt purchases and view the corresponding data in reports. 

Tracking of Out-of-Scope Sales

Selecting this option enables you to track the supplies to companies that are outside of the scope of UAE VAT. For example, if the entities of your company are registered as a tax group, sales transactions between them are considered out of scope of VAT. If this option is selected, you can select the Out of Scope taxation option and specify an Out-of-Scope reason for the entire document or for some of document lines; applicable to Invoice, Credit Note, Consignee Report, Fixes Asset Sale, and some other documents. This data is not required for VAT Return in the UAE.

Tracking of Out-of-Scope Purchases

Selecting this option enables you to track the supplies from companies that are outside of the scope of UAE VAT. For example, the supplies can be considered out of scope if they are drop-shipped from one overseas business to another overseas business without being brought into the UAE. If this option is selected, you can select the Out of Scope taxation option and specify an Out-of-Scope reason for the entire document or for some of document lines; applicable to Invoice Received, Debit Note, Subcontractor Report, Additional Expenses, Employee Expense Report, Bank Payment, Cash Payment, and some other documents. This data is not required for VAT Return in the UAE.









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