Tax codes and rates
Install the UAE tax codes, add your own, and change a rate on a date without touching old documents.
Before you begin
- You have reference.manage (Finance). The list opens with company.view.
- You know the treatment each code needs: standard rated, zero rated, exempt, out of scope or reverse charge.
Steps: install the UAE codes
- Choose Finance > Configuration > Taxes.
- Press Install a country's taxes.
- Choose AE and confirm.
The system adds SR 5 %, ZR 0 %, EX 0 %, OS 0 %, RC 5 % (purchases, reverse charge), IM 5 % (import) and BL 5 % with 0 % recoverable. Rates start on 2018-01-01. Running it again adds nothing; codes already present are left alone. Packs also exist for SA, BH, OM, QA and KW.
Steps: add a code
- On Finance > Configuration > Taxes, press New tax.
- Type the Tax code, 2 to 30 letters, digits,
_or-. It is made capitals and must be unique. - Type the Tax name (up to 120 characters) and optionally the Arabic name.
- Choose the Tax type: VAT, withholding, excise, corporate or zakat.
- Choose the Treatment.
- Choose Applies to: Both, Sales or Purchases.
- Set Recoverable percent from 0 to 100 (input tax you can reclaim).
- Tick Reverse charge / Import if it applies, and type an Exemption reason if needed.
- Keep Active on and save.
- Open the code and press New rate to give it a rate (see below).
Steps: change a rate on a date
- Open the code.
- Close the current rate by setting its To date (for example 2026-12-31).
- Press New rate, type the Rate (zero or more) and the From date (2027-01-01).
- Save.
A rate window with an empty To date runs until further notice. Windows of one code never overlap.
What happens next
Each document line freezes the rate for its document date. An invoice dated 2026-12-31 charges 5 %; one dated 2027-01-01 charges 6 % (test figures). A credit note is priced at the original invoice's date, so it charges 5 % even if the rate is 6 % today.
Treatments in plain words
| Treatment | Rate | On the return |
|---|---|---|
| Standard rated | 5 % | Own box with output tax |
| Zero rated | 0 % | Own box, counts as a supply |
| Exempt | 0 % | Separate box |
| Out of scope | 0 % | Separate box |
| Reverse charge | 5 % | Output and input both shown |
An example on sales: lines of 100.00 each coded ZR, EX and OS all carry VAT 0.00, but the tax register lists three different treatments and they land in different return boxes.
Blocked input tax and reverse charge
- A vendor bill line of 1,000.00 with
SR: Dr Expense 1,000, Dr Input VAT 50, Cr Payable 1,050. - With
BL(5 %, 0 % recoverable): the 50 goes to expense: Dr Expense 1,050, Cr Payable 1,050. - With
RCfrom a foreign supplier: Dr Expense 1,000 / Cr Payable 1,000, plus Cr Output VAT 50 / Dr Input VAT 50. With a code that is only 50 % recoverable, input VAT debited is 25 and 25 goes to expense.
Refusals
| Situation | Message |
|---|---|
| New rate overlaps | 'SR already has a rate covering 2026-01-01. Close the existing window first.' |
| To before From | 'The closing date cannot precede the opening date.' |
| Negative rate | 'A rate cannot be negative.' |
| Document date with no rate | 'SR has no rate for <date>. ...' |
| Inactive code on a line | 'SR Standard rated 5% is no longer in use.' |
| Code used in the wrong direction | 'RC is not used on a invoice document.' |
| Duplicate code | 'Another tax code already uses that code.' |
| Recovery over 100 | 'Recovery runs from 0 to 100 percent.' |
Good to know
- Changing a code's treatment or recovery changes how returns read it, even for documents already posted. Add a new code for a new treatment instead of editing a used one.
- A rate above 100 is accepted by the rate screen; keep rates realistic.
- Tax codes and rates are saved by one person without an approver. Your own procedure should require a second check.