Tax · Reference

Actions and results

What each Tax button and automatic behaviour does, with worked numbers and what the system refuses.

On this page (21)

Taxes Fiscal positions Invoice (Sales)Vendor bill (Purchase)Credit note Simulator Determinations Withholding Corporate tax Returns Return record Adjustments Tax register Tax to ledger Documents against the ledger Any tax master Registrations Country packages Overview Applications > Tax > Features Applications > Tax > Fields

Taxes

Action	When	What you do	What happens
Install the UAE pack	New test company with no tax codes	Finance > Configuration > Taxes > Install a country's taxes > AE	Codes SR 5%, ZR 0%, EX 0%, OS 0%, RC 5% (purchase, reverse charge), IM 5% (import), BL 5% (0% recoverable) added with rates from 2018-01-01; running it again adds nothing ('already present')
Install the KSA pack	Second test company	Install SA	KSA codes installed (15% standard etc. as the pack defines); existing codes untouched
Dated rate change	Code SR 5% from 2018-01-01 open-ended	Close the window at 2026-12-31; add 6% from 2027-01-01 (test only); invoice dated 2026-12-31 and 2027-01-01	First invoice charges 5%, second 6% (rate frozen on the line by document date)
Overlapping rate refused	SR 5% open-ended	Add 6% from 2027-01-01 without closing	Refused: 'SR already has a rate covering 2027-01-01. Close the existing window first.'
No rate for the date	Code with a rate only from 2027	Use it on a 2026 invoice	Refused: '<code> has no rate for 2026-...'

Fiscal positions

Action	When	What you do	What happens
Export position by country	Position EXPORT automatic, Tax country SA, SR -> ZR; customer with tax country SA	Create an invoice line with SR	Line is charged ZR 0%; VAT 0.00; a domestic customer still gets SR 5%
Assigned beats automatic	Customer assigned position B; an automatic position A matches its country	Invoice the customer	Position B applies
Registered only	Position with Registered only = Yes	Invoice a customer without a TRN, then one with a TRN	Applies only to the one with a TRN
Remove the tax	SR -> Nothing at all	Invoice	Line carries no tax code at all (not zero rated) and does not appear on the return
Account substitution	Revenue 4000 -> 4100 for the position	Post an invoice to that customer	Revenue posts to 4100

Invoice (Sales)

Action	When	What you do	What happens
Standard VAT	Line 1,000.00 with SR 5%	Post	Net 1,000.00, VAT 50.00, total 1,050.00; Dr Receivable 1,050 / Cr Revenue 1,000 / Cr Output VAT 50
Zero rated vs exempt vs out of scope	Three lines 100.00 each: ZR, EX, OS	Post; open the tax register	VAT 0.00 on each; register shows three different treatments (zero / exempt / out_of_scope) - they land in different return boxes
Unrecoverable VAT on goods capitalised	Settings: Unrecoverable VAT on goods into cost ON; bill for stocked goods with BL	Post the bill	The non-recoverable VAT is added to the goods' cost (journal names it)
Cash rounding line is no supply	Invoice with a CASHROUND line	Prepare a return	The rounding line is not on the return
Determination at save	Settings: Documents take their tax code from rules ON; an active rule	Create an invoice line with no tax code; save	The line gets the rule's code at save
Determination frozen at posting	Same	Post the invoice; open the document meta / Determinations	A determination with source 'document' is recorded; its number is kept on the invoice
Settings off	Documents take their tax code from rules OFF	Save a line without a tax code	No code is filled by rules

Vendor bill (Purchase)

Action	When	What you do	What happens
Recoverable input tax	Bill line 1,000.00 SR 5%	Post	Dr Expense 1,000 / Dr Input VAT 50 / Cr Payable 1,050
Blocked (non-recoverable) input tax	Bill line 1,000.00 with BL (5%, 0% recoverable)	Post	Supplier owed 1,050; the 50 is moved from input VAT to expense: net effect Dr Expense 1,050 / Cr Payable 1,050
Reverse charge books output and input	Bill from a foreign supplier, line 1,000.00 with RC 5% (100% recoverable)	Post	Bill total 1,000.00 (supplier owed the net); journal: Dr Expense 1,000 / Cr Payable 1,000, plus Cr Output VAT 50 / Dr Input VAT 50 (net zero)
Reverse charge partly recoverable	RC code with recovery 50%; line 1,000	Post	Output VAT 50 credited; input VAT 25 debited; 25 to expense

Credit note

Action	When	What you do	What happens
Credit note keeps the original rate	Invoice dated before a rate change (5%); rate later 6% (test)	Raise and post a credit note today	Credit note charges 5% (priced at the original invoice's date)

Simulator

Action	When	What you do	What happens
Rule decides zero rating for export	Active registration AE; active rule P10: ship_to_country ne AE -> ZR (exclusive)	Simulate: sale, today, ship-to SA, line 1,000	Line ZR 0%, tax 0.00, explanation 'Rule <CODE> v1: ...'; estimate (nothing recorded)
Domestic falls to the next rule	Also rule P100: side eq sale -> SR	Simulate ship-to AE	SR 5%: tax 50.00 on 1,000
Missing decisive fact refused	Rule P10 needs ship_to_country	Simulate without ship-to	Refused: 'Rule <CODE> needs ship_to_country to decide line 1. Give it rather than letting the tax be guessed.'
Rule conflict refused	Two exclusive rules at P10 giving different codes both match	Simulate	Refused: 'Rules A and B both decide line 1 at priority 10. Resolve the conflict; no rule is picked arbitrarily.'
No rule, no code	No rule matches; tax code 'By the rules'	Simulate	Refused: 'No rule decides line 1 and it names no tax code. Nothing is defaulted.'
Registration not in force	Registration valid until 2025-12-31 only	Simulate a 2026 date	Refused: 'The AE VAT registration ended on 2025-12-31; nothing covers 2026-...'
No registration at all	Company with no registration	Simulate	Works, with warning 'No AE VAT registration is recorded for this company.'
Certificate required	Rule gives EX only with a certificate; customer without one	Simulate	Refused: 'Rule <CODE> gives EX only with a valid exemption certificate, and none covers <date>.'; add and activate a certificate -> EX given
Tax-inclusive amounts	Amounts include tax ticked	Line 1,050.00 at SR	Net 1,000.00, tax 50.00, gross 1,050.00
Line vs document rounding	Policy A: line; Policy B: document, 2 places, half up	Three lines 0.10 at 5% under each	Line rounding: 0.01 x 3 = 0.03 (0.005 each rounds up); document rounding: total 0.015 -> 0.02, spread to the largest remainders (0.01, 0.01, 0.00)
Classification drives a rule	Product class MED (members MED-001); rule product_class eq MED -> ZR	Simulate with product MED-001	ZR; facts show product_class [MED]
Buyer registered fact	Rule buyer_registered eq true -> X	Simulate for a customer with a TRN vs without	Rule applies only to the customer with a TRN
Return boxes shown	Active AE form with boxes	Simulate	Each line lists the boxes it would count in (e.g. FORM:1a)
Record a determination		Record determination	Saved with a number, facts, rules with revisions, input/output SHA-256; listed in Determinations

Determinations

Action	When	What you do	What happens
Same input = same record		Record the same request twice (same source)	Second answer 'replayed' - same number, no new record
Verify against today's rules	A recorded determination; then archive its rule and activate a different one	Open > Check against today's rules	'The frozen record matches its hash.' and 'Today's rules would answer differently: ...'

Withholding

Action	When	What you do	What happens
Withholding over a threshold with accumulation	Rule: yearly threshold 50,000, rate 5%	Work out 30,000 (record); then 40,000 for the same payee and year	First: subject 0, withheld 0.00. Second: accumulated 30,000, subject 20,000, withheld 1,000.00, net payment 39,000.00
Rule outside its dates	Rule valid from next year	Work out today	Refused: '<CODE> does not apply on <date>.'

Corporate tax

Action	When	What you do	What happens
Workpaper from the ledger	Posted income 1,000,000 and expense 500,000 in 2026; policy 9% above 375,000	New workpaper 2026-01-01 to 2026-12-31 with the policy	Accounting profit 500,000.00; taxable 500,000.00; tax = (500,000 - 375,000) x 9% = 11,250.00
Adjustments	Draft workpaper	Edit adjustments: permanent +20,000 'Entertainment disallowed'	Taxable 520,000.00; tax 13,050.00
No rate, no tax	Policy with rate 0 (or none)	Create workpaper	Taxable shown; tax 0.00 'No rate configured: no tax worked out'
Review recomputes; approve; reopen	Workpaper by A	B reviews (recomputed from the ledger); C approves; (before approving) B reopens	States move Draft > Reviewed > Approved; reopen returns to Draft

Returns

Action	When	What you do	What happens
Create a return	Active registration AE and active AE VAT form	Tax > Returns > New: registration, form, 1 Jul - 30 Sep	Draft return with a number; version 1
Overlapping period refused	Return for Q3 exists	New return 1 Sep - 31 Oct	Refused: '<number> already covers part of this period. Amend it instead.'

Return record

Action	When	What you do	What happens
Prepare fills the boxes	Q3: invoice 1,000 + 50 SR; credit note 100 + 5; bill 400 + 20 recoverable; RC bill 1,000 (50/50)	Prepare	Output tax 50 - 5 + 50 (reverse charge) = 95.00; recoverable 20 + 50 = 70.00; payable 25.00; source lines listed with their boxes; snapshot SHA-256
Box mapping by treatment and place of supply	Form boxes: 1a standard AUH, 1b standard DXB, 2 zero rated, 3 exempt	Invoices with place_of_supply AUH and DXB, a ZR and an EX line; prepare	Each net amount lands only in its own box
Notes reduce the box	Credit note in the period	Prepare	Credit note amounts are negative in the boxes
Ledger reconciliation	Only invoice-driven tax in the period	Prepare; open Reconciliation	Return output/recoverable equal ledger; difference 0.00
Unexplained difference blocks approval	Form tolerance 0; a document's journal edited/posted with different tax (or manual tax journal linked)	Prepare; review; approve	Approve refused: 'The return differs from the tax accounts by <x>. Explain the difference before approval.'
Explain then approve	Same	Send back to draft; Explain difference; prepare; review; approve (different people)	Approved
Lines without a tax code block approval	A posted line with no tax code in the period	Prepare; try to approve	Exception 'n posted lines carry no tax code and fit no box.' listed; approval refused
Registration not covering the period	Registration ending mid-period	Prepare	Exception 'Registration <CODE> does not cover the whole period.'; approval refused
Prepare again recalculates	Prepared return; post another invoice in the period	Prepare again	Boxes and lines updated; new hash
Review	Prepared by A	B: Review	Reviewed by B
Send back	Prepared or reviewed	Reviewer: Send back (reject)	Draft again; reviewer cleared
Approve	Reviewed by B, no blockers	C: Approve	Approved by C; event tax.return_approved.v1; locked
Submit with authority reference	Approved	Submit with reference FTA-SUB-0001	Submitted; submitted by/at recorded; event tax.return_submitted.v1
Acknowledge	Submitted	Acknowledgement with reference FTA-ACK-0001	Acknowledged; reference stored
Amend creates a new version	Submitted Q3 v1; a late invoice dated in Q3 posted	Amend with a reason; prepare v2	v1 becomes 'Amended' (superseded); v2 draft linked; after prepare the Amendment bridge shows before/after/change per box
Carry forward a refund	Q2 submitted with payable -3,000.00 (refundable)	Prepare Q3	Carried forward in 3,000.00; payable reduced by it
Approved is never edited	Approved return	Explain difference / PUT boxes (API)	Refused: 'An approved or submitted return is not edited. Amend it: a new version is linked to this one.'
Wrong-state actions		Approve a draft; submit a reviewed return (API)	'A draft return cannot be approved.' / 'A reviewed return cannot be submitted.'
Group return	Tax groups ON; group G with company A (from 1 Jan) and B (from 1 Aug); registration with group code G	Prepare Q3 for the group registration	A's lines for Jul-Sep and B's only from 1 Aug

Adjustments

Action	When	What you do	What happens
Bad-debt relief	Invoice 1,050 (50 VAT) dated 7+ months ago, written off in Accounting; settings 6 months	Bad-debt relief: invoice, customer told on, blank amount, reason; Propose	Proposed: net -1,000, tax -50 on the invoice's code(s) in proportion
Bad-debt relief too early	Invoice dated 2 months ago	Propose	Refused: 'Relief can be claimed from <date>: 6 months after the date of supply (<date>).'
Post bad-debt relief (another person)	Proposed by A	B: Post	Journal Dr Output VAT 50 / Cr Write-off account 50; state posted; the return of its period shows -50 output
Customer paid: recovery	Posted relief	Customer paid: reverse; another person posts	Recovery posted: Dr Write-off 50 / Cr Output VAT 50; the relief shows Reversed; a second reverse is refused 'That relief is already being reversed.'
Import VAT reverse charged	Code IM 5%	Import VAT: declaration DXB-IMP-1, customs value 20,000, method reverse charge; Propose; another person posts	Tax 1,000.00; journal Dr Input VAT 1,000 / Cr Output VAT 1,000; return shows both
Import VAT paid at the border	Paid from account 1110 (bank)	Method Paid; post	Dr Input VAT 1,000 / Cr 1110 1,000
Declared VAT check		Customs value 20,000, VAT 900	Refused: "The declaration's VAT 900.00 is not 5.0000% of 20000.00 (1000.00); check the value or the tax code."
Reject	Proposed adjustment	Reject with a reason	Rejected; reason appended ' \| rejected: ...'; nothing posted

Tax register

Action	When	What you do	What happens
Register totals	Posted documents in the period	Open Tax register	Output, Input, Recoverable and Net payable equal the return's figures for the same period

Tax to ledger

Action	When	What you do	What happens
Reconciles	Normal postings	Open Tax to ledger	Documents = Ledger per account; difference 0.00

Documents against the ledger

Action	When	What you do	What happens
Per-document check	One imported/old document whose journal differs	Open the ledger check	'1 documents do not tie' and that document listed with register vs ledger

Any tax master

Action	When	What you do	What happens
Activate by somebody else	A creates a rule	A: Activate; B: Activate	A refused: 'Somebody other than the person who prepared this determination rule must decide it.'; B: Active
Active is not edited	Active registration	Edit (API)	Refused: 'An active tax registration is not edited. Archive it and create a new one.'

Registrations

Action	When	What you do	What happens
Overlapping registration refused	Active AE VAT registration open-ended	Activate a second AE VAT one from today	Refused: '<CODE> already covers these dates for this tax and branch.'

Country packages

Action	When	What you do	What happens
Package needs a legal source	No active legal source for AE	Activate an AE package	Refused: 'A country package rests on at least one active legal source...'; after activating a source it activates and emits tax.package_activated.v1

Overview

Action	When	What you do	What happens
Exceptions	Registration ending in 20 days; certificate ending in 10 days; posted line with no tax code this quarter	Open Overview	Each shows in Exceptions with Blocks/Check and opens its list

Applications > Tax > Features

Action	When	What you do	What happens
Determination off	Admins A and B	A: Determination Off; propose; B approves; open Simulate (direct link), POST simulate	Menus Simulate/Determinations hidden; API refused as turned off
Corporate tax off blocked	A draft workpaper	Propose Corporate tax Off	Blocked '1 workpaper(s) are not approved yet. Approve them first.'
Tax groups off blocked	Active registration with a group code	Propose Tax groups Off	Blocked '... file as a group. Archive or change them first.'
Return controls protected		Try to turn off 'Return approval controls and ledger check'	Locked

Applications > Tax > Fields

Action	When	What you do	What happens
Authority reference required		Set Required (approved); submit a return without a reference	Refused: "Enter the authority's reference: this company requires it on submission."

Updated 3 October 2026