United Arab Emirates

Modules

The following modules related to the United Arab Emirates localization are available:

Name	Technical name	Description
United Arab Emirates - Accounting	l10n_ae	Default fiscal localization package for the UAE.
United Arab Emirates - Accounting Reports	l10n_ae_reports	Adds VAT and corporate tax reporting capabilities.
United Arab Emirates - Point of Sale	l10n_ae_pos	Adds local compliance behavior for PoS receipts.

Note

The localization’s core modules are installed automatically with the localization. The rest can be manually installed.

See also

United Arab Emirates Payroll localization documentation

Localization overview

The UAE fiscal localisation provides a fully configured accounting setup aligned with national VAT and corporate tax regulations. It includes a localised chart of accounts, VAT-compliant tax groups, standard journals, fiscal year configurations, and reporting features that ensure accuracy and compliance with the Federal Tax Authority (FTA).

The UAE localization package provides the following key features to ensure compliance with local fiscal and accounting regulations:

• Chart of accounts: a predefined structure aligned with UEA accounting standards

• Taxes: preconfigured tax groups and templates based on UAE VAT rules

• Fiscal positions (tax and account mapping): automated tax adjustments to handle local and cross-border transactions

• VAT return: structured according to the UAE VAT return format, as issued by the FTA

• Corporate Tax Report: structured according to the UAE Corporate Tax Report, as issued by the FTA

Chart of accounts

The UAE chart of accounts is aligned with IFRS and FTA tax requirements. This includes classified accounts for assets, liabilities, equity, income, and expenses, as well as separate accounts for VAT payable and VAT receivable.

This structure ensures compatibility with UAE reporting obligations, VAT, and corporate income tax filings.

Taxes

The UAE localization includes preconfigured VAT rates and taxes as defined by the FTA:

• Standard VAT (5%): The prevailing VAT rate applied to most taxable goods and services supplied within the UAE.

  The supplier charges 5% VAT on the sale (Output VAT). VAT-registered businesses may generally recover the VAT paid on eligible business purchases (Input VAT).

  Example

  Most commercial sales, retail goods, telecommunication services, non-exempt private education, and non-exempt private healthcare.

• Zero-Rated VAT (0%): Taxable supplies on which VAT is applied at a rate of 0%.

  No VAT is collected on the sale, but the supplier remains fully entitled to recover input VAT related to making these supplies.

  Example

  • Exports of goods and services (subject to qualifying conditions)

  • International transport and related services

  • Designated sectors such as specific healthcare and education services

  • First supply of residential property (subject to conditions)

• Exempt VAT: Supplies that fall outside the taxable category and are not subject to VAT.

  The supplier does not charge VAT and cannot recover input VAT on costs related to exempt activities.

  Example

  • Financial services: Interest on loans, bank account operations, and life insurance (when no explicit fee is charged).

  • Local passenger transport: Taxis, buses, metro services, and domestic flights within the UAE.

• Import VAT: VAT that is applied to goods imported into the UAE.

  Import VAT is recorded at the applicable rate (generally 5%). In UAE VAT reporting, only the VAT amount is declared; the import base amount is not required in the tax report.

  Applied when recording customs-import transactions or imports recognized through the VAT return.
• Out of Scope: Transactions that fall outside the scope of UAE VAT legislation.

  Example

  • Transactions entirely outside the UAE

  • Internal accounting adjustments

  • Certain government-mandated transfers

  Note

  These taxes can be applied directly to products or managed dynamically through fiscal positions.

Reverse charge mechanism (RCM)

• Description: Mechanism that transfers the obligation to account for VAT from the non-resident supplier to the UAE VAT-registered recipient.

• Mechanism: The recipient declares VAT as both output VAT and input VAT in the VAT return. This typically results in a net-zero impact when fully recoverable.

• Application: Commonly used for imported services and cross-border B2B transactions where the supplier has no UAE VAT registration.

VAT return (VAT201)

The UAE VAT Return report includes:

• Output VAT

• Input VAT

• Reverse charge VAT

• Zero-rated and exempt sales

Note

The report structure follows the official FTA format and can be exported in both Excel and PDF formats for manual submission.

Corporate tax report

The UAE Corporate Tax Report helps companies prepare for compliance with local corporate tax regulations. The report is found under Accounting ‣ Reporting ‣ Corporate Tax Report and includes:

• Net profit

• Exempt income

• Allowable deductions

• Adjustments for non-deductible (disallowed) expenses

• Corporate tax amount

As part of this report, users can set exempt income, allowable deductions, and disallowed expenses accounts.

Important

No default fiscal categories, disallowed expenses, allowable deduction accounts, or exempt income accounts are configured. Users must classify them manually according to their tax situation.

Exempt income accounts

Exempt income generally refers to revenue that is not subject to corporate tax under UAE rules. Examples may include:

• Dividends received from qualifying shareholdings

• Capital gains on the sale of qualifying shares

To classify exempt income, navigate to the chart of accounts, open the relevant account, and assign the tag Corporate Tax Report – Exempted Income Accounts. Tagging these accounts ensures that exempt income is reported accurately without being included in the taxable base.

Allowable deductions accounts

Allowable deductions are expenses that are incurred solely for business purposes. Examples include:

• Employee salaries and benefits

• Office rent, utilities, and professional services

To classify allowable deductions, navigate to the chart of accounts, open the relevant expense account, and assign the tag Corporate Tax Report – Allowable Deductions Accounts. Tagging these accounts ensures that they effectively reduce taxable profits.

Disallowed expenses

Some expenses are not deductible for corporate tax purposes. Examples include:

• Fines and penalties (e.g., traffic or administrative violations)

• Non-business or personal expenses

• Excessive entertainment costs beyond permitted limits

• Certain related-party costs that do not meet transfer-pricing requirements

To configure these expenses, navigate to the chart of accounts, open the relevant account, and assign a fiscal category. Then, in the Fiscal Rates tab, configure the start date and the fiscal rate.

Automatic currency rates

The UAE localization includes automatic synchronization of foreign currency rates through a built-in connection with the Central Bank of the UAE. Exchange rates are retrieved automatically and applied across transactions when the Automatic Currency Rates option is enabled.

Note

Rates are updated automatically, but can also be manually updated when necessary.

Invoicing language

Invoices can be issued in different languages to meet regional or customer-specific requirements at two levels:

• Customer level: To assign a preferred language to a customer, go to Accounting ‣ Customers ‣ Customers or Point of Sale ‣ Orders ‣ Customers, and open the relevant customer form. In the Language field, update the language preference. All documents for that customer are then automatically generated in the selected language.

• Company level: To add Arabic as a secondary language to meet business needs:

  • For Tax Invoices: Go to Accounting ‣ Configuration ‣ Settings, in the Customer Invoices section.

  • For Point of Sale receipts: Go to Point of Sale ‣ Configuration ‣ Settings, and navigate to the Bills & Receipts section.

  Then, enable the Gulf Cooperation Council Format option, and Save.

Invoice types

The type of invoice to be issued depends on the following criteria:

• Tax Invoices (B2B): A Tax Invoice, used for business-to-business transactions, contains all the details required for VAT recovery, including the supplier and customer legal names, addresses, TRN numbers (where applicable), itemized VAT amounts, and total amounts. This is the standard document required when a customer intends to reclaim VAT.

• Simplified Tax Invoices (B2C): A Simplified Tax Invoice is primarily used for business-to-consumer (B2C) transactions, where the customer is not expected to reclaim VAT. It contains reduced customer information (customer TRN is not required), focusing instead on supplier details, VAT charged, and the total amount payable.

Important

A Simplified Tax Invoice is still a legally valid tax invoice under VAT law.