VAT in Transactions

Zoho Books has a wide range of sales and purchase transactions. Each of these transactions are VAT-compliant i.e., different VAT treatments can be applied on items while creating transactions for them.

Sales Transactions

Quotes
Sales Orders
Delivery Challans
Invoices
Recurring Invoices
Credit Notes

Purchase Transactions

Expenses
Recurring Expenses
Purchase Orders
Bills
Recurring Bills
Vendor Credits
Self-Billed Invoices

Once you have set up the taxes, contacts and items in your Zoho Books account, you can start creating transactions. Transactions in Zoho Books are affected by the:

Location from where your business is operating (mainland or designated zone)
Place of supply
Contact’s tax treatment

If you are a VAT registered person in the mainland, here’s how your transactions will incur VAT:

Sales Transactions in Mainland

Customer Tax Treatment	Place of Supply	Tax Rates
VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope
Non VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope
GCC VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope
GCC VAT Registered	GCC	Zero Rate
GCC Non VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope
GCC Non VAT Registered	GCC	Zero Rate
Non GCC	-	Zero Rate
VAT Registered - Designated Zones	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope
Non VAT Registered - Designated Zones	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope

Let us understand each of these scenarios in detail:

Case 1

Customer Tax Treatment	Place of Supply	Tax Rates
VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope

Let’s say you sell goods or services to a VAT-registered customer in the UAE. The supply takes place within the UAE.

In this case, the supply of goods or services can have any one of the following taxes:

5%
0%
Exempt
Out of the scope of VAT

Case 2

Customer Tax Treatment	Place of Supply	Tax Rates
Non VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope

Let’s say you sell goods or services to a customer who is in the UAE and is not registered for VAT. The supply takes place within the UAE.

In this case, the supply of goods or services can have any one of the following taxes:

5%
0%
Exempt
Out of the scope of VAT

Case 3

Customer Tax Treatment	Place of Supply	Tax Rates
GCC VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope

Let’s say you sell goods or services to a customer who is registered for VAT in any one of the GCC member countries other than the UAE. The supply takes place within the UAE.

In this case, the supply of goods or services can have any one of the following taxes:

5%
0%
Exempt
Out of the scope of VAT

Case 4

Customer Tax Treatment	Place of Supply	Tax Rates
GCC VAT Registered	GCC	Zero Rate

Let’s say you sell goods or services to a customer who is registered for VAT in any one of the GCC member countries other than the UAE. The supply takes place within the GCC.

In this case, the supply of goods or services is zero-rated.

Case 5

Customer Tax Treatment	Place of Supply	Tax Rates
GCC Non VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope

Let’s say you sell goods or services to a customer who is in any one of the GCC member countries other than the UAE and is not registered for VAT. The supply takes place within the UAE.

In this case, the supply of goods or services can have any one of the following taxes:

5%
0%
Exempt
Out of the scope of VAT

Case 6

Customer Tax Treatment	Place of Supply	Tax Rates
GCC Non VAT Registered	GCC	Zero Rate

Let’s say you sell goods or services to customer who is in any one of the GCC member countries other than the UAE and is not registered for VAT. The supply takes place within the GCC.

In this case, the supply of goods or services is zero-rated.

Case 7

Customer Tax Treatment	Place of Supply	Tax Rates
Non GCC	-	Zero Rate

Let’s say you sell goods or services to a customer who is outside any of the GCC member countries.

In this case, the supply of goods or services is zero-rated.

Case 8

Customer Tax Treatment	Place of Supply	Tax Rates
VAT Registered - Designated Zones	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope

Let’s say you sell goods or services to a customer who is registered for VAT in a designated zone in the UAE. The supply takes place within the UAE.

In this case, the supply of goods or services can have any one of the following taxes:

5%
0%
Exempt
Out of the scope of VAT

Case 9

Customer Tax Treatment	Place of Supply	Tax Rates
Non VAT Registered - Designated Zones	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope

Let’s say you sell goods or services to a customer who is in a designated zone in the UAE and is not registered for VAT. The supply takes place within the UAE.

In this case, the supply of goods or services can have any one of the following taxes:

5%
0%
Exempt
Out of the scope of VAT

Purchase Transactions in Mainland

Vendor Tax Treatment	Place of Supply	Tax Rates
VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope, Domestic Reverse Charge (Standard Rate, Zero Rate)
Non VAT Registered	UAE	Out of Scope, Domestic Reverse Charge (Standard Rate, Zero Rate)
GCC VAT Registered	UAE	Goods / Goods & Services - Out of Scope, Reverse Charge (Standard Rate, Zero Rate) Services - Exempt, Reverse charge (Standard Rate, Zero Rate)
GCC VAT Registered	GCC	GCC VAT/Exempt/Out of Scope
GCC Non VAT Registered	UAE	Goods / Goods & Services - Out of Scope, Reverse Charge (Standard Rate, Zero Rate) Services - Exempt, Reverse charge (Standard Rate, Zero Rate)
GCC Non VAT Registered	GCC	Out of Scope
Non GCC	-	Goods / Goods & Services - Out of Scope, Reverse Charge (Standard Rate, Zero Rate) Only Services - Exempt, Reverse charge (Standard Rate, Zero Rate)
VAT Registered - Designated Zones	UAE	Goods - Out of Scope Services - Standard Rate, Zero Rate, Exempt, Out of Scope
Non VAT Registered - Designated Zones	UAE	Out of Scope, Reverse Charge (Standard Rate, Zero Rate)

Case 1

Vendor Tax Treatment	Place of Supply	Tax Rates
VAT Registered	UAE	Standard Rate, Zero Rate, Exempt, Out of Scope, Domestic Reverse Charge (Standard Rate, Zero Rate)

Let’s say you buy goods or services from a VAT-registered vendor in the UAE. The supply takes place within the UAE.

In this case, the supply of goods or services can have any one of the following taxes:

5%
0%
Exempt
Out of the scope of VAT

Whereas, the domestic reverse charge will be applicable only for the following taxes:

Case 2

Vendor Tax Treatment	Place of Supply	Tax Rates
Non VAT Registered	UAE	Out of Scope, Domestic Reverse Charge (Standard Rate, Zero Rate)

Let’s say you buy goods or services from a vendor who is in the UAE and is not registered for VAT. The supply takes place within the UAE.

In this case, the supply of goods or services is out of the scope of VAT.

Whereas, the domestic reverse charge will be applicable only for the following taxes:

Case 3

Vendor Tax Treatment	Place of Supply	Tax Rates
GCC VAT Registered	UAE	Goods / Goods & Services - Out of Scope, Reverse Charge (Standard Rate, Zero Rate) Services - Exempt, Reverse charge (Standard Rate, Zero Rate)

Let’s say you buy goods or services from a vendor who is registered for VAT in any one of the GCC member countries other than the UAE. The supply takes place within the UAE.

In this case, the supply of goods, goods associated with services / services associated with goods are out of the scope of VAT. Whereas, the reverse charge will be applicable for the following taxes:

For services, the supply can have any one of the following taxes:

Exempt
Reverse Charge along with 5% or 0%

Case 4

Vendor Tax Treatment	Place of Supply	Tax Rates
GCC VAT Registered	GCC	GCC VAT / Exempt / Out of Scope

Let’s say you buy goods or services from a vendor who is registered for VAT in any one of the GCC member countries other than the UAE. The supply takes place within the GCC.

In this case, the supply of goods or services is exempted from tax. However, if you want to apply tax on the supply, you would need to create a new tax in Zoho Books for the relevant GCC member country and apply it in the appropriate transaction. The transaction could also be out of the scope of VAT.

Case 5

Vendor Tax Treatment	Place of Supply	Tax Rates
GCC Non VAT Registered	UAE	Goods / Goods & Services - Out of Scope, Reverse Charge (Standard Rate, Zero Rate) Services - Exempt, Reverse charge (Standard Rate, Zero Rate)

Let’s say you buy goods or services from a vendor who is in any one of the GCC member countries other than the UAE and is not registered for VAT in that particular country. The supply takes place within the UAE.

In this case, the supply of goods, goods associated with services / services associated with goods are out of the scope of VAT. Whereas, the reverse charge will be applicable for the following taxes:

For services, the supply can have any one of the following taxes:

Exempt
Reverse Charge along with 5% or 0%

Case 6

Vendor Tax Treatment	Place of Supply	Tax Rates
GCC Non VAT Registered	GCC	Out of Scope

In this case, the supply of goods or services is out of the scope of VAT.

Case 7

Vendor Tax Treatment	Place of Supply	Tax Rates
Non GCC	-	Goods / Goods & Services - Out of Scope, Reverse Charge (Standard Rate, Zero Rate) Only Services - Exempt, Reverse charge (Standard Rate, Zero Rate)

Let’s say you buy goods or services from a vendor who is outside any of the GCC member countries.

In this case, the supply of goods, goods associated with services / services associated with goods are out of the scope of VAT. Whereas, the reverse charge will be applicable for the following taxes:

For services, the supply can have any one of the following taxes:

Exempt
Reverse Charge along with 5% or 0%

Case 8

Vendor Tax Treatment	Place of Supply	Tax Rates
VAT Registered - Designated Zones	UAE	Goods - Out of Scope Services - Standard Rate, Zero Rate, Exempt, Out of Scope

Let’s say you buy goods or services from a VAT-registered vendor in a designated zone in the UAE. The supply takes place within the UAE.

In this case, the supply of goods is out of the scope of VAT. For services, the supply can have any one of the following taxes:

5%
0%
Exempt
Out of the scope of VAT

Case 9

Vendor Tax Treatment	Place of Supply	Tax Rates
Non VAT Registered - Designated Zones	UAE	Out of Scope, Reverse Charge (Standard Rate, Zero Rate)

Let’s say you buy goods or services from a vendor who is in a designated zone in the UAE and is not registered for VAT. The supply takes place within the UAE.

In this case, the supply of goods or services is out of the scope of VAT.

Whereas, the reverse charge will be applicable for the following taxes: