[Proposal] UAE Tax Report

Hi,

ERPNext has the features which allows generation of invoices complaint to UAE VAT taxation. However, it doesn’t provide the VAT return report (VAT 201?) which is pre-defined by the UAE govt.

We have already connected with one of the ERPNext user in UAE and learnt about the data source for each point in the report. We will highly appreciate your input where confirmation or correction is needed, so that we can make a feature which covers the all possible scenarios.

1. Emirates-wise Sales

It refers to Emirate-wise sales made in a specific time period. This values will be polulated based on Sales Invoices.

What we need to map is:

  1. Which address field is being used for tracking Emirate (City/State). Or should it be a separate select field in all the Emirates pre-listed?
  2. Provide From Date and To Date field for selection of period.

2. Tourist Scheme

We will need guidance what flags would be needed as:

  • In the Sales Invoice to categorize it for Tourist.
  • Also, if it is applied, will there be any difference on how VAT posting is done on the invoice?
  • Are the tourist invoices not covered in the point 1 (emirates based sales)?
  • The field also seems to be greyed-out. Does it mean that it’s source is somewhere else and not exported by the accounting solution used by the company?

3. Reverse Charge

  • Document: Sales Invoice (please correct if needed)
  • Add a field called Reverse Charges Applied - Yes / No
  • If reverse charge applied as Yes, then
    • VAT posting happens in the Liability account, but not added to the invoice Grand Total
  • If reverse charge applied as No, then
    • VAT value isn’t posted in the GL

In the following field, it will fetch the value of Purchase Invoices where Is Reverse Charge as Yes.

4. Zero Rated Supplies

The total value of Sales Invoice made for the items on which 0% VAT is applied.

5. Exempted Rated Supplies

The total value of Sales Invoice made for the items which are exempted from the VAT.


(for point 6 and 7)

6. Goods Imported into UAE

Fetched from the UAE custom’s portal. No need for manual intervention.

7 & 8. Only Totals and Adjustment

9. Standard Rated Expenses

It will include expense / purchases booked via:

  • Purchase Invoice
  • Journal Entry
  • Payment Entry

10. Reverse Charge Applied

Calculated based on Purchase Invoice where Reverse Charge is applied.

  • If yes, then VAT will not be added Grand Total but VAT liability will be booked
  • If no, then VAT will not be booked

At the end of each section, there will be total’s section which is pretty standard.

Here are some of the standard queries.

  1. Is there a specific format (like XLS or JSON) in which export is required, for further upload on govt. portal?
  2. Adjustments would be handled on the govt. portal only? Or it could be added in the exported file?

Suggestions welcome!

4 Likes

Thank you @umair. We were working on similar requirements for Bahrain. This can be used in any GCC country as all of them have more or less similar VAT structure. So I guess the final report needs to be added to GCC as a whole.

In due course the plan of the countries is to have one VAT payment area. Example VAT paid in UAE and then items imported into Saudi will not have VAT applied again.

Not sure how UAE filing is done but in Bahrain VAT portal needs to be manually filled and submitted. No attachments are uploaded as of now.

Adjustment are handled by Government portal. Any excess amount can be collected in cash or adjusted for future tax payment. Usually a JV is passed to account for it.

However, I will leave it to UAE folks to reply but yes you need to take this report for all GC countries where VAT is applied which is Bahrain, KSA and UAE.

2 Likes

Thank you @umair. We were working on similar requirements for Bahrain. This can be used in any GCC country as all of them have more or less similar VAT structure. So I guess the final report needs to be added to GCC as a whole.

Sure. Once it’s developed, we can easily it for other countries.

In due course the plan of the countries is to have one VAT payment area. Example VAT paid in UAE and then items imported into Saudi will not have VAT applied again.

As learned from one of the UAE users, though GCC section is there, but it’s not being implmented for now.

Adjustment are handled by Government portal. Any excess amount can be collected in cash or adjusted for future tax payment. Usually a JV is passed to account for it.

Cool. Thanks.

However, I will leave it to UAE folks to reply but yes you need to take this report for all GC countries where VAT is applied which is Bahrain, KSA and UAE.

Yes. Waiting for an upvote and suggestions from ERPNext UAE community.

2 Likes

Hi Umair,
Please find the following for the explanation for each of your points from our side.
Our answers are in Bold.

  1. Which address field is being used for tracking Emirate (City/State). Or should it be a separate select field in all the Emirates pre-listed?
  • From the place of supply in the Purchase or Sales invoice
  1. Provide From Date and To Date field for selection of period.

Note: periods might change, in a very basic way, One year divided into four cycles.

  • 1 Mar to 31 May,

  • 1 Jun to 31 Aug,

  • 1 Sep to 30 Nov,

  • 1 Dec to 28/29 Feb

  1. Tourist Scheme

We will need guidance on what flags would be needed as:

UAE government shared more details about the entire process in this link:

https://u.ae/en/information-and-services/finance-and-investment/taxation/tax-refund-for-tourists

Conditions for tourists to claim their VAT refunds

For a tourist to claim VAT refund on purchases he made in the UAE, he must fulfill certain conditions:

- Goods must be purchased from a retailer who is participating in the 'Tax Refund for Tourists Scheme’
- Goods are not excluded from the Refund Scheme of the Federal Tax Authority
- He must have the explicit intention to leave the UAE in 90 days from the date of supply, along with the purchased supplies
- He must export the purchased goods out of the UAE within three months from the date of supply
- The process of purchase and export of goods must be carried out according to the requirements and procedures determined by Federal Tax Authority.

Where and how can tourists claim VAT refund for their shopping Last Updated on 11 Sep 2019

Federal Tax Authority has allocated spaces where tourists can reclaim taxes through a fully electronic system managed in partnership with a global operator. Tourists will receive their refunds through a special device placed at the departure port - airport, seaport, or border port - by submitting the tax invoices for their purchases from the outlets registered in the Scheme, along with copies of their passport and credit card.

Once these documents are submitted, tourists can either recover the VAT in cash in UAE dirhams, or have it transferred to their credit card. Until October 2018, 4,000 retail outlets across the UAE were connected electronically to the system.

These eligible outlets can be identified with posters displayed on their storefronts and visible to visitors.

Useful links

Tax refund system for tourists

VAT refunds for tourists

Shop tax free in the UAE

  • In the Sales Invoice to categorize it for Tourist. (Please refer to information provided up )
  • Also, if it is applied, will there be any difference on how VAT posting is done on the invoice? (Please refer to information provided up)
  • Are the tourist invoices not covered in the point 1 (emirates based sales)? (Please refer to information provided up)
  • The field also seems to be greyed-out. Does it mean that it’s source is somewhere else and not exported by the accounting solution used by the company? (We need more explanation about it)
  1. Reverse Charge
  • Document: Sales Invoice (please correct if needed) - Sales invoice and purchase invoice

  • Add a field called Reverse Charges Applied - Yes / No – We think its YES but not very sure

  • If reverse charge applied as Yes, then

  • VAT posting happens in the Liability account, but not added to the invoice Grand Total - Yes, but in a seperate liability account

  • If reverse charge applied as No, then

  • VAT value isn’t posted in the GL – We think Yes but not sure

  • In the following field, it will fetch the value of Purchase Invoices where Is Reverse Charge as Yes. - Yes, since we are creating a separate liability account both sales and purchase should reflect in that. We are not sure on this as well

For more information on Reverse charge plz refer - https://www.zoho.com/ae/books/vat/guides/reverse-charge-uae.html

  1. Zero Rated Supplies

The total value of Sales Invoice made for the items on which 0% VAT is applied. - sales and purchase invoice

  1. Exempted Rated Supplies

The total value of Sales Invoice made for the items which are exempted from the VAT. - sales and purchase invoice

  1. Goods Imported into UAE

Fetched from the UAE custom’s portal. No need for manual intervention. - not all goods are fetched from UAE custom’s portal. Should be a flexible approach

7 & 8. Only Totals and Adjustment – Yes but not sure

9.Standard Rated Expenses

It will include expense / purchases booked via:

Purchase Invoice – Yes

Journal Entry – Yes

Payment Entry – Yes

  1. Reverse Charge Applied

Calculated based on Purchase Invoice where Reverse Charge is applied.

If yes, then VAT will not be added Grand Total but VAT liability will be booked - has to be there in the Grand total but not sure

If no, then VAT will not be booked – Yes but not sure

At the end of each section, there will be total’s section which is pretty standard.

Here are some of the standard queries.

  • Is there a specific format (like XLS or JSON) in which export is required, for further upload on govt. portal? - no standard formats

  • Adjustments would be handled on the govt. portal only? Or it could be added in the exported file? - yes , Adjustments will be handled on the govt. portal only

1 Like

Hi,
I have a few questions with regards to UAE VAT

  1. Where does one record VAT Category of Customer/Supplier (Similar to GST Category: Regular Registered, Unregistered,etc)
  2. How does one automate the VAT applicability? One of the parameters is where the Business is B2B or B2C for Intra GCC Supplies, if it was purely based on Customer location, it could have been automated via Tax Rule
    Reference: https://tallysolutions.com/mena/uae-vat/types-of-vat-supply-uae/
  3. Does ERPNext have a Returns Summary section which shows potential errors in transactions?
    Please refer to Returns Summary section in this link for details https://help.tallysolutions.com/article/te9rel64/Tax_International/GCC_VAT/gcc_vat_returns.htm

EDIT: Other questions related to UAE VAT added

  1. Where does one record VAT Category of Customer/Supplier (Similar to GST Category: Regular Registered, Unregistered,etc) // Tax category field is available in customer/supplier master. We can use the same for this requirement.

  2. How does one automate the VAT applicability ? One of the parameters is where the Business is B2B or B2C for Intra GCC Supplies, if it was purely based on Customer location, it could have been automated via Tax Rule
    Reference: https://tallysolutions.com/mena/uae-vat/types-of-vat-supply-uae/

// Yes. We are adding these customers in different customer groups and then will apply the tax rule for them.

  1. Does ERPNext have a Returns Summary section which shows potential errors in transactions?
    Please refer to Returns Summary section in this link for details https://help.tallysolutions.com/article/te9rel64/Tax_International/GCC_VAT/gcc_vat_returns.htm
    // Return summary is not available currently in ERPNext. This is a good report to have in ERP.
1 Like

Thanks for your response