From January 2018, the United Arab Emirates will fall under VAT (value added tax) regime. ERPNext is pretty much compatible to manage VAT transactions, however we can further simplify it for the regional user by adding more specific features (like Chart of Accounts with default VAT account).
Please suggest the features to be added/localized in the ERPNext to make it VAT ready for UAE. Following are the few queries which I would like raise in the same regards.
Will there be multiple VAT slabs? If yes, what will it be?
Will there be VAT TIN for each company? If yes, will it be required fetched in the transactions as well?
What would be the process of filing returns? Which all report will be required for it.
Once we have the decent coverage of the requirement, we can create a Github Issue for it.
@umair As far as I know the full working of it haven’t been revealed yet. We are still waiting to hear the implementation in detail. Hope to learn about by oct as that is when the registration for vat begins.
Hello @umair ,
Here are the answers for your questions about VAT in UAE.
Will there be multiple VAT slabs? If yes, what will it be?
Yes there will be 3 slaps: 5%, 0%, and Exempted
2.Will there be VAT TIN for each company? If yes, will it be required fetched in the transactions as well?
Yes there will TIN, I am not sure if it will be fetched in transaction or not. The UAE VAT is almost copy paste from UK and EU VAT, so what applies there will most probably apply here.
What would be the process of filing returns? Which all report will be required for it.
The filling will be manual, not generated from the system as of now.
Will ERPnext have mechanism to set particular customer groups as VAT Exempted, or VAT 5%, or VAT 0%? We would like to see this kind of intelligence in ERPnext. The same may apply to Supplier group and item group.
How easy or difficult is it to make ERPnext UAE VAT compliance?
Thanks for sharing details. We plan to soon incorporate UAE VAT feature in ERPNext.
As suggested, we shall discuss the option of update tax category in the Item master etc. Generally, tax rate is applied based on the Items and not based on the party (customer/supplier). If these is a use-case for categorizing party as well, please elaborate it with an example.
The use case for Customer Group categorizing is that there are some customers like government and semi-government Oil&Gas companies and NGO’s who will be exempted from paying VAT. So you may sell one product to a private company who will pay VAT, and in parallel sell the same product to an NGO who will not pay VAT and will ask you to remove it.
Not an expert but I will share some information given to me by our Chartered accountant while registering for VAT in UAE for us.
VAT is on Items & services only but not based on customer group. If any customer are exempt to pay VAT, they have to file return to government but first have to pay to retailer.
For VAT Return, most probably it will be quarterly and through online e-service. No details yet for in which format.
But this is 1st phase of VAT in UAE, and in 1st phase no return will be accepted (I still doubt this). Starting from 2nd phase return will be possible and no timeline for starting of 2nd phase.
With regards to VAT, it will be no different from existing tax structures - inputs and outputs - balance is what you pay to the government…Tax rules can be applied - VAT will be applicable to GCC countries that have signed on - so far that is only Saudi.
If you sell to a consumer, you charge 5%
If you sell to a B2b, you charge 5% - and they can reclaim that
if you export, you charge no VAT
Question is this is coming up now - will you be able to create a new module for VAT in time?
Yes we could. Can you please list all the countries in which VAT will be released on 1st January? Also, will vat slabs etc. will be same or vary in each country?
Join the UAE chapter of the ERPNext foundation and/or consider launching a KSA chapter and Meetup group to act as a collaboration platform to expedite ERPNext VAT compliance
I think that rather than build bespoke VAT solution for every new jurisdiction, we should really look at a way to make VAT configuration flexible without resorting to unique code being written by domain.
An overhaul of the tax determination system in favour of something more similar to how salary components work would be a solution that adapts itself to almost all imaginable use-cases.
Hi,
For now UAE & KSA are going live from Jan 1, 2018.
1. Out of Scope, Exempted, 0% & 5%
2. Tax Rules on the basis of “Ship To”:
2.1 Designated Zones >>> Mainland
2.2 Mainland >>> Designated Zones
2.3 Exports
2.4 Imports
2.5 Mainland >>> Mainland
2.6 Designated Zones >>> Designated Zones
4. Reports / Invoices / Documents (known as of now):
4.1 TRN (Tax Registration Number) to be printed on Invoices; either of VAT Group or Registered Company. Multiple companies may have same TRN.
4.2 Registered Address to be printed on Invoices
4.3 Tax Credit Note should have sufficient information of related Invoices along with the original amount and difference with the reason of credit
4.4 Unique or Sequential document numbers
4.5 Returns are not yet clarified but assuming the common transactional information would be needed