@Venture, do you have a link for the document that is the source of your last screen shot? It is something I have not seen before. It is also evidence of confusion within the FTA as the VAT scheme is implemented. The interesting paragraph is this one:
That paragraph contradicts requirements of Article 59 of the Executive Regulations, which happen to be listed directly above it. It also contradicts the public education material shown and discussed in another forum thread: Tax Invoicing format in UAE. And all three are official FTA information. All three cannot be satisfied simultaneously by Manager or any other accounting program.
Part of the problem seems to that guidance for full and simplified tax invoices is being mixed, while the legal requirements are quite distinct.
@Tut I suspect that as move forward there will be other clarifications that are made available. I do hope this new facts would aid the powers that be at Manager to provide a solution that has to be in synergy with local requirements.
This publication is important as the tax invoice process is relevant to all businesses making taxable supplies, and tax invoices received must be compliant with the UAEâs VAT legislation to enable input tax recovery on the VAT return. In this regard, it is important to note the emphasis on the word â must â â these requirements are mandatory rather than optional.
Failure to comply with the stated requirements can have a number of implications for the business, ranging from commercial (upset customers that may not be entitled to a Tax Credit for VAT incurred) to the imposition of penalties for the failure to issue and deliver compliant tax invoices. There could be many other flow on consequences, hence the importance of âgetting it rightâ.
The Public Clarification includes the following key points:
Whenever a taxable supply is made, a tax invoice must be issued and delivered to the recipient (if the conditions for a simplified tax invoice are met, then a simplified tax invoice can be issued and delivered instead).
It is not acceptable to offer only an option of providing an invoice (and thus not provide one if the customer does not request one). A tax invoice must be provided in all circumstances where a taxable supply is made.
A simplified tax invoice does not have to show the net value (the value before tax) for each line item.
A full tax invoice must show the tax value and net value for each line item; however the gross value (the total including tax) does not have to be shown for each line item.
If a tax invoice is issued in a foreign currency, it must show the tax amount converted to AED and the approved exchange rate used for the conversion.
Rounding on tax invoices must be to the nearest Fils on a line item basis. "
Thank you, @Venture, for the links. So it is clear that your screen shot came from VATP006. Unfortunately, that does not help, because VATP006 is the source of contradictions, yet has dubious legal authority. It is not the decree law. It is not the Executive Regulations referenced by the decree law. It is a clarification in response to unspecified questions that does not seem to originate from any binding authorization. I understand, however, that UAE businesses feel compelled to follow it, because it was issued by the FTA.
Article 59 of the Executive Regulations very clear states that full tax invoices must include the rate of tax for each line item, not the tax amount. Manager satisfies this requirement, regardless of whether transactions are tax-inclusive or tax-exclusive.
VATP006 creates an alleged requirement for tax due on each line item of full tax invoices out of thin air, in direct contradiction of Article 59 and without citing any justification. This Manager does not do, although it satisfies Article 59âs requirement for stating tax amounts due for each tax rate in total.
All other guidance within VATP006 can be satisfied by choice of appropriate options and transaction titles of either sales invoices or receipts. So nothing else is relevant to this discussion.
If I were you, I would formally raise the question with the FTA as to where this new requirement is supported by law or regulation. What the invented interpretation does is effectively dictate how accounting software must function. And I doubt that was the intent of the regulations. Let me explain.
If only the tax rate must be shown, amounts for various line items sharing a tax code can be summed, then multiplied by the tax rate to determine a total tax amount for that tax code. This satisfies Article 59. However, if tax amount must be shown on each line, the multiplication by the tax rate must occur for every line item first. Then the line-item tax amounts can be added in parallel with adding the net (tax-exclusive) amounts. More operations are necessary. The interpretation of VATP006 has the effect of forcing computerized accounting software to operate the same way as a supplier would when filling out a tax invoice by hand.
@Tut, the link for the document can be found here.
This is the guide to tax invoices and gives a public clarification of Article 59 of Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (âExecutive Regulationsâ)
[A list of complete guides on UAE VAT can be found here]
Basically the clarification states that any invoice under the value of AED 10,000 can be made in a simplified format where the manager current invoice theme is sufficient. In this the requirements for a simplified invoice are as follows:
The words âTax Invoiceâ clearly displayed on the invoice;
The name, address, and Tax Registration Number of the supplier;
The date of issuing the tax invoice;
A description of the goods or services supplied; and
The total consideration and the tax amount charged.
AED 10,000 and above the invoice needs to be Full Tax Invoice which requires all of the above that is mentioned in the simplified format and also one of the requirements of Article 59 of the Executive Regulations is for a full tax invoice to show the following information for each line item:
the unit price;
the quantity or volume supplied;
the rate of tax; and
the amount payable expressed in AED.
A further requirement of a full tax invoice, mentioned later in the Article is:
for the tax invoice to show the total gross amount payable expressed in AED.
As a full tax invoice includes several line items, each shall have the net amount payable (excluding the tax) as well as the tax due.
The FTA accepts that a full tax invoice does not need to include gross amounts (i.e. inclusive of tax) for each line item, as the total gross amount payable for the invoice shall be stated.
Any guidance or support with implementing this in manager would be a great help.
@Tut, sorry read your reply to the link now. I think most of the requirements for a Full Tax invoice are satisfied by Manager even based on the clarification, I think the only thing we need to work on would be showing the tax rate on every line item and the tax value on every line item.
I know showing tax rate for every line item is satisfied by showing rate of tax at the end when all the tax rates are the same, but I think most clients especially the government sector now understand or apply the law as the rate should be shown on every line item separately again and again, which is redundant, but since it is a requirement now for most customers we have to create invoices based on that format.
Any help regarding the above and also on showing the tax value on every line item, would be highly appreciated.
@Taher_Nomani, everyone seems to be going around in circles, using the so-called clarification VATP006 (which is based on nothing) of a clear statement in Article 59 of the Executive Regulations that did not need to be clarified.
Users within the UAE must address this issue with the FTA. No one at NGSoftware can do so.
I cannot give you that help. Iâm not the developer. I do not even know exactly how Manager performs its tax calculations. Several approaches are possible. With some, doing what you ask might be quite difficult. I suspect there would be more sympathy for your case if there was an actual legal requirement. The fact remains, however, that an invoice that showed line by line tax amounts instead of tax rates would actually be illegal under the plain meaning of UAE law.
@Tut thanks for your comprehensive reply and thanks for acknowledging that you are ânot the developerâ and as you had stated you ââŚdo not even know exactly how Manager performs its tax calculationsâ
With your candid reply to the above, may I request you to advise who at NGS Software has the latitude to address the issue at hand?
A regulatory body in a country is independently governed and adopts and passes resolutions that best fits the need of the country, that being said, the framework for governance and the announcement of any resolutions and or clarifications is strictly enforced by the the said regulatory authority. If a country as an example introduced for the first time a bill or a law that would allow its citizens, residents and visitors to drive a vehicle in its territorial land, knowing well that the concept of driving a vehicle with proper training is common on almost all parts of this world, that would still not allow for the argument that every single aspect of driving a vehicle in its geographical land would be exactly the same in other parts of the world.
Each country works within a global framework of policies that may be similar but not necessarily be the same as other countries. Understanding this theology will enlighten you with understanding that the FTA in UAE is managed by some of the best and brightest but as with any policy adoption they leave room for something called âclarificationsâ
Having said the above, the posters of this topic in this forum including myself have provided sufficient evidence of what the expectations are form organizations based in UAE by the FTA. Notwithstanding, what has been stated my me, its critical for the powers that be at NGS Software, that the FTA is the newest regulatory body for the UAE and deployment of TAX is as new for the country as would be as if we just started driving a vehicle, it will adapt and pass resolutions or clarifications to alert the stakeholders who ascribe to the regulatory body.
That is precisely why I recommended above to "âŚformally raise the question with the FTA as to where this new requirement is supported by law or regulation. "
Indeed, I have been very impressed with the quality and clarity of your law and regulations as the new tax scheme was implemented. Seldom are tax regulations anywhere so easy to understand and logical. The issue discussed in this topic is the first instance I have seen where there seem to be FTA-generated contradictions.
