In this article
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.
