DEAR Systems VAT Compliance - UAE

DEAR Systems is a fully functional VAT-compliant inventory system. Designed to cater to all your accounting needs according to the legal conditions attributed to implementing VAT within the United Arab Emirates.

With DEAR Systems, you are able to:

  • Create & send VAT-compliant invoices.
  • View business reports.
  • Generate VAT returns (in the format specified by the FTA).

and much more. Let’s get started by setting up the basic configuration of VAT in DEAR Systems. 


Prerequisites:

  • Only available for account holders/Organisations within the UAE
  • Only available for DEAR Standalone accounts - these VAT compliance settings can not be integrated with Xero or QuickBooks Online. 


Table of Contents:


How to Set up VAT compliance when joining DEAR

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When you are initially setting up your organisation to comply the countries VAT rules with DEAR, you will have to make the following changes within the Settings page. These unique changes which are made and are available only for account holders/Organisations within the UAE.


Let's start by adding a new organisation.

  1. Navigate to the Organisation drop down and click on the Create new button. Alternatively, create a new organisation via the DEAR home page.
  2. Set the Country to United Arab Emirates
    • NOTE: Once the Location has been set this option cannot be changed.
  3. Continue through the steps, selecting DEAR when prompted to Connect your accounting system
    • NOTE: These features are not available for accounts integrated with Xero or QuickBooks Online.
  4. Under Add Additional Information, select Other Settings. If this is an existing UAE account, you can access this page from Settings → General Settings.
  5. Go to the Financial Settings tab. 
  6. If your Organisation is Vat registered, toggle the option to Yes.
  7. Enter TRN - Tax registration number (TRN - A unique 15-digit number provided to you by the FTA for tax purposes)
  8. Define the Reporting Period.
  9. Set the Lock Date.
  10. Next, navigate to Reference Books → Stock → Locations & Bins. The Designated Zone and Emirate options are only available for organisations located within the UAE.
  11. Define which locations, if any, are within a Designated Zone
    • NOTE: VAT is not applied to suppliers within the designated zone.
  12. Select which Emirate, if applicable, the location is found in from the dropdown list.
  13. Once the settings are configured, click Save. You have successfully entered the VAT details related to your organisation. You can now continue with setting up the rest of your organisation (See Getting Started Guide for further information). 


VAT Rates

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After successfully setting up your tax information, below listed are different tax rates will be auto-populated while creating transactions.


Standard Rate [5%]

A VAT of 5% can be applied to transactions created in Dear Systems. Most of the transactions that occur in the UAE fall under this tax rate.


Zero Rate [0%]

A VAT of 0% can be applied to transactions created within the Designated Zones.

The following sectors are zero-rated whether or not the transaction takes place within a Designated Zone:

  • The educational sector
  • The medical sector
  • The real estate sector 
  • The local transport sector
  • Exports of goods and services to outside the GCC


The following supplies are zero-rated, whether or not the transaction takes place within a Designated Zone:

  • International and intra-GCC transport.
  • Supplies for certain sea, air, and land means of transportation (such as aircraft and ships).
  • Supply of precious metals for investment (gold, silver, and platinum).
  • Newly constructed residential properties that are supplied for the first time within three years of their construction.
  • Supply of certain educational services and relevant goods and services.
  • Supply of certain health care services and associated goods and services.
  • Certain eatables (a standard list will be ratified across the GCC by the Financial and Economic Cooperation Committee). 
  • The oil sector and the oil and gas derivatives sector (at the discretion of each member state.             


Exempt

If any items are exempted from VAT, you can select them as exempt from VAT while creating transactions. You don’t need to create new tax rules for such transactions.


Categories of supplies that will be exempt from VAT are:

  • The supply of certain financial services.
  • Sale of bare land.
  • Lease or sale of residential property.
  • Local transport.


Out of Scope

For supplies of any of your items do not fall under the scope of VAT, then you can select this option while creating transactions for them.

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