Information specific for United Arab Emirates:

• Documentation for UAE.
• VAT Reporting Extension for UAE.

 Accounting template features

The template has been setup in order to let you manage a company in United Arab Emirates:

• Basic Currency is AED (UAE Dirham).
• Multi-currency accounting.
• VAT Table set up for UAE reporting.

Balance Sheet and Profit & Loss

The Accounts table contains all accounts and groups, structured for balance sheet (BS) and the profit & loss statement (PL).

• Customize the accounting plan to exactly your needs by changing description, add or remove accounts and groups. 
• Select the View Basic and enter the opening balance available in the column “Opening”.

The following image shows the Account table, Balances view.

• The column “Balance AED” is updated automatically when you change the opening amount or you enter transactions in the Transactions table”.

Balance sheet

The balance sheet shows your assets and your liabilities. Banana Accounting includes accounts that are usually utilized by SMEs. Nevertheless, you can customize the accounts. Be careful not to modify the accounts related to the VAT reporting. Those are essential to correctly generate the VAT report needed to fill out the online VAT return form in Saudi Arabia.

Profit & loss statement

The profit & loss statement shows the revenues and the expenses incurred by the company. Banana Accounting included accounts usually used by SMEs. Nevertheless, you can customize the accounts when needed.

Clients/suppliers register

After the P&L statement, there is a section where you can assign accounts to specific customers and suppliers. You will use these accounts to register transactions directly related to specific customers or suppliers. Banana also offers the possibility to print invoices from these transactions.

All the accounts in the clients/suppliers register are regrouped under two accounts present in the assets and liabilities.

Double-entry accounting

You will notice that liability and revenue accounts are shown in negative and in red color. This is due to the fact that Banana Accounting fully leans on the concept of double-entry accounting. The principle of “debit and credit” present in the double entry accounting is usually represented in two separate columns. When it appears in a single column, as it happens in the accounts table, it is shown in red and in negative to better distinguish debit accounts from credit accounts.

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​The Vat Table in Banana accounting contains the VAT codes that are setup accordingly the need for UAE, with all the cases you need in order to correctly calculate and report the VAT.

• The VAT Code is the code you will enter in the Transactions table. The program will automatically calculate the VAT and register on the specified account. 
• The column “Gr 1” indicate in with box of the form the amount should be totalized.  It is used by the Extension to appropriately sum amounts.
  If you add a new VAT Code you should also specify the form code.
• VAT percentage is 5% or 0%.
  In case new percentages are introduced by the fiscal authorities, a new VAT percentage needs to be modified in the VAT table.

VAT due UAE

VAT code that are used for revenues. There are VAT Code for each Emirate.

• Sales at 5%: These vat codes include all goods and services subjected at the standard rate of 5%. The FTA requires to separate the sales.
• Tax refunds provided to tourists: this VAT code should be used only by retailers which provide the tax refunds to tourists.
• Reverse charge: this VAT code is used to record entries related to reverse charge mechanisms.
• Sales zero rated: all goods and services sold in the UAE which are subject to a rate of 0%.
• Exempt sales: all goods and services sold in or outside Saudi Arabia which are exempt from the VAT.
• Import of goods: all goods imported in the UAE and declared at customs.
• Sales out of scope: a VAT code for sales outside the scope of the VAT agreement.
• Sales to other GCC implementing states: GCC implementing states are not subject to the VAT agreement.

All the adjustments are registered with the same VAT code used for the transactions that needs an adjustment.

VAT recoverable UAE

•    Purchases at 5% standard rate: VAT code for all the purchases subject to the standard rate of 5%.
•    Purchases with reverse charge: VAT codes to recover any VAT paid as output VAT under the reverse charge mechanism.
•    Purchases zero rated: All goods and services purchased which are subject to a 0% rate.
•    Purchases exempt: All goods and services purchased which are exempted from the VAT.
•    Purchases out of scope: a VAT code for purchases outside the scope of the VAT agreement.

All the adjustments are registered with the same VAT code used for the transactions that needs an adjustment.

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​The Transactions table contains all the transactions carried out by a business.

After having adjusted the accounts, you can start to input the transactions in the software.

In order to insert the transactions correctly, it is essential to know all the different VAT codes for the UAE.

You can find detailed information about the double-entry accounting and about transactions. From the transaction is possible to generate invoices automatically.

Further down the page, you will find specific examples regarding the UAE on how to enter VAT transactions.

Due Transactions VAT Due

All the examples shown are based on the UAE template.

The “Doc” column is used to identify the transactions for the examples.

Sales

This category includes goods and services sold at the standard rate of 5%. The FTA requires a different VAT code depending on which location the sales happens.

• DOC 10 - This is an example for a simple transaction where the company sell panel woods to a customer in Abu Dhabi. The VAT code used is the “OSR1”, it corresponds to a standard rate sale in Abu Dhabi.

Credit note

A credit note is normally issued to correct a mistake. It is usually sent by a seller to a buyer (e.g. the invoice amount was overstated and, therefore, the buyer reduces its amount).

• DOC 101 - This transaction represents a credit note. It is directly related to the DOC 10 transaction.

Reverse charge

The reverse charge is a mechanism which is sometimes used in VAT reporting. Importing services is one of the main causes for utilizing the reverse charge mechanism. In fact, the VAT arising from importing goods can be collected at the border. For services, it is impossible to collect the VAT at the border. Therefore, the reverse charge mechanism must be used because it is necessary to register the related VAT due.

• DOC 30 - This is a transaction where the reverse charge mechanism must be utilized. In this case, the company bought a service and paid it with the bank account. Since the VAT on a service cannot be collected at the border, the company must use the reverse charge to account for both the VAT recoverable and due. As you can see, the journal entries cancel each other, there is not an actual impact on the company. Nevertheless, the tax authority can keep track of the VAT reporting.
• DOC 70 – This transaction shows an example of reverse charge for goods imported. The FTA requires a different VAT code for these kinds of transactions.

Zero-rated sales

Zero-rated goods and services are taxable but at a 0% rate. This regulation exists to allow companies selling 0% supplies to deduct the recoverable VAT and, therefore, get a refund.

• DOC 40 - This transaction involves a zero-rated sale. There are certain products which have a 0% VAT rate. In this case, the product sold is classified as zero-rated.

Exempted sales

Exempted goods and services are not subjected to VAT. When you sell exempt supplies, you do not collect the VAT. A company selling only exempt supplies cannot register for VAT.

• DOC 60 - In this case, the product sold is exempted from the VAT. The main difference from a 0% VAT rate is that with exempted good it is not possible to obtain a VAT refund.

VAT recoverable transactions

All the examples shown are based on the UAE template.

The “Doc” column is used to identify the transactions for the examples.

Purchases

This category includes goods and services purchased at the standard rate of 5%.

• DOC 80 - This transaction represents a standard rate purchase.

Purchase Zero rated

Zero rated goods and services are taxable but at a 0% rate. This regulation exists to allow companies selling 0% supplies to deduct the recoverable VAT and, therefore, get a refund.

• DOC 90 - This is an example of zero rated purchases. In this case, the product purchased by the company belongs to a 0% rate VAT category.

Purchases Exempt

Exempted goods and services are not subjected to VAT. When you buy exempt supplies, you cannot claim a deduction.

• DOC 100 - This transaction represents an exempt purchase. The product purchased is exempted according to the VAT regulations.

Adjustments

All the adjustments made to a transaction must be recorded with the same VAT code used in the transaction that needs an adjustment.

If the adjustment is negative, the “-“ sign must be used when inserting the VAT code.

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