Taxes and VAT

SolaCount calculates VAT on every sales and purchase line, posts it to the correct VAT accounts, and rolls it up into VAT reports and periodic VAT returns. Use this page to set up taxes (rates, zero-rated, exempt, reverse charge), record tax registration numbers (TRN), check VAT with the detail reports, and file and settle a VAT return.

The setup wizard installs your country's default taxes, so most organizations only come here to add a special rate, check a report, or file a return.

Where to find it

If VAT is turned off for your organization (VAT Enabled = No), the tax pages, tax reports and VAT returns are hidden and documents carry no tax. Invoices and bills still work.

How taxes work in SolaCount

Each tax is a single record with a name, a rate, a scope and a classification. There is no separate "code" and "rate" layer to manage: the code is generated automatically from the name and rate when you save.

The classification is derived for you:

• Rate above 0 → standard.
• Rate exactly 0 → zero.
• Reverse Charge ticked → reverse.
• Exempt and Out of Scope taxes come from the country defaults installed by setup; the New Tax form cannot create these two classifications.

A purchase tax with a rate above 0 and scope Purchases Only or Both is treated as recoverable (claimable) input VAT. Zero, exempt and out-of-scope taxes are never claimable.

Zero-rated vs exempt vs out of scope vs "no tax"

All four produce no VAT amount, but they are not the same:

An explicit zero rate (picking Zero Rated, Exempt or Out of Scope) is deliberate: the line posts with VAT 0.00 and is still counted in the VAT reports. Since 2026-10-01 this works on credit notes and debit notes too.

A tax with a rate above 0 must produce VAT. If a line has a positive-rate tax but a zero or negative VAT amount, posting is blocked with:

Line N: VAT amount cannot be zero when a VAT code/rate is selected.

SolaCount does not apportion input VAT for exempt supplies. If part of your input VAT is not recoverable, use a non-claimable tax for those purchases (see Tips).

UAE VAT defaults

When an organization in the United Arab Emirates finishes setup, SolaCount installs these taxes (standard rate 5%):

Use the emirate-specific sales taxes if you need to report standard-rated sales by emirate. Each tax has an Arabic name too.

The UAE TRN must be exactly 15 digits (see Tax registration numbers).

Manage taxes

Create a tax

1. Go to Settings → Taxes.
2. Click New Tax at the top right of the list. The New Tax Rate form opens.
3. Enter Name (e.g. "VAT Standard Rate") and Rate (%).
4. Choose Applies To: Both, Sales Only or Purchases Only.
5. Tick Reverse Charge only for a self-assessed purchase tax. The form notes: "Reverse charge rates are purchases-only."
6. Click Create Tax. You return to the list with "Tax created."

VAT accounts are created automatically ("VAT accounts are managed automatically by the system."). You do not pick an account on the form.

Create a tax while entering a document

On a document line, the tax picker offers a quick-create option. Enter the English name (Arabic optional), rate and scope. If a tax with the same name, scope and rate already exists, SolaCount selects that one instead ("Tax already exists. Selected existing tax.").

Edit a tax

1. In Settings → Taxes, use the row's Edit action.
2. Change name, rate, scope or reverse-charge, then save. You see "Tax updated."

You cannot change the rate of a tax that has been used on a posted (non-draft) invoice or bill:

This tax is used on posted transactions. Create a new tax for a new rate.

For a rate change (e.g. a new legal rate from a future date), create a new tax and deactivate the old one when the new rate takes effect. Existing documents keep the rate they were posted with.

Activate or deactivate a tax

Use the row's Deactivate / Activate action. You see "Tax deactivated." or "Tax activated." If your organization requires approval for tax master data, the change is submitted as a proposal instead and applies only once approved.

Delete a tax

Use the row's Delete action and confirm "Delete this tax? This cannot be undone." A tax that appears on any invoice or bill line cannot be deleted:

Cannot delete: this tax is used on documents.

Deactivate it instead.

Filter the list

Use the search box (name or code), the Scope filter (All Scopes, Sales, Purchases, Both) and the Status filter, then Filter. Clear resets the filters. Summary counts at the top show total, active and inactive taxes.

Apply tax on documents

Every line of a quote, sales order, invoice, sales receipt, credit note, bill, expense, debit note and refund has its own tax. Pick the tax on the line; totals recalculate as you type.

Price mode. Above the lines, the Price mode switch offers Excl. tax (prices are before VAT) and Incl. tax (prices already include VAT). Switching on a document that already has prices asks "Change price mode?" — "All populated lines will be recalculated using the new tax mode." Click Recalculate to continue. The switch is locked once the document is no longer a draft. Your organization's default comes from the tax settings (sales and purchases can differ).

Rounding is per line or per document, set in the organization tax settings.

Multi-currency. VAT is stored in the document currency and converted to base currency at the document's recorded exchange rate in the VAT reports and returns.

Reverse charge

Reverse charge applies when you buy services (or certain goods) from a supplier outside the UAE: you self-assess the VAT instead of the supplier charging it.

1. Create or use the Reverse Charge (Purchases) tax (RC-PUR, 5%, purchases only).
2. On a bill (or debit note), pick it on the relevant line.
3. Post the bill.

What happens:

• The supplier payable is the net amount only. Reverse-charge VAT is not added to the bill total or the amount you owe the supplier.
• SolaCount posts both sides of the VAT:
  • RC Input VAT (asset, under Taxes & Duties): debit, recoverable input VAT.
  • RC Output VAT (liability, under Taxes Payable): credit, VAT you owe. These accounts are created per reverse-charge rate and named like "Reverse Charge (Purchases) - RC Input VAT (5%)" and "... - RC Output VAT (5%)".
• If the reverse-charge tax is not claimable, there is no input side: the VAT is added to the expense (or to the inventory cost) instead, and only the output side is posted.

On the VAT return the output side is counted in Output VAT and the input side in Input VAT, so a fully recoverable reverse-charge purchase nets to zero. The Reverse Charge column/card shows the reverse-charge output VAT as an information figure; it is already inside Output VAT and is not added again.

If a reverse-charge VAT movement has no input/output account recorded (old data), the return cannot be calculated and shows:

Reverse-charge tax movement N has no attributable input/output tax account. Review its posting before calculating the return.

VAT posting mode

Settings → Account Defaults → VAT Posting Accounts shows your VAT Posting Mode and the system-managed VAT accounts (VAT Input, VAT Output, VAT Control):

• Separate input/output (default): sales VAT goes to VAT Output (liability), purchase VAT to VAT Input (asset).
• Single control account: both go to VAT Control.

The Tax Reports header follows the mode (separate input/output cards, or one "Single control account" card). VAT returns work in either mode, including periods where the mode changed mid-period.

Standard-rated taxes may also get their own per-rate input/output accounts ("SR Standard Rated - Output VAT (5%)").

VAT reports

Tax Reports (summary)

Reports → Taxes → Tax Reports shows VAT totals for a date range. Sales Tax Summary and Purchase Tax Summary open the same report limited to one direction. Export to PDF or Excel from the report toolbar. Changing the dates keeps the direction you opened (the page carries it as a hidden scope field), and the PDF header says "Sales Only" or "Purchases Only" in the page language.

Turning VAT on or off

VAT is switched on in Settings → General Settings, in the VAT and organization tax settings card ("Enable VAT here before applying tax to bills or sales. This does not change existing documents or enable VAT automatically."). A member with the setup.edit permission (owners have it) ticks VAT Enabled and clicks Save VAT settings ("VAT settings saved."). Members who can only view setup see "Ask the organization owner or a member with setup permission to review VAT settings." Review all organization tax settings (for members with setup.view) opens step 2 of the organization setup. Once the organization has posted transactions the switch is locked: "VAT enablement is locked after posted transactions. Review tax settings with the organization owner." Where the plan does not include VAT the card says "VAT is unavailable under the organization's subscription." With VAT off, bill and sales lines cannot add tax ("VAT is disabled for this organization. New bill lines cannot add VAT.") but tax selections already saved on old drafts stay visible for review.

VAT Detail by Rate

Reports → Taxes → VAT Detail by Rate lists every VAT movement in the date range, grouped by direction and tax, e.g. "Sales: SR Standard Rated (5%)" and "Purchase: SR Standard Rated (5%)". The default range is the current month.

Each group shows its count and totals; the footer shows Total (All Rates), total net base and total VAT.

Direction. Since 2026-09-30 the report filters by the transaction's real direction:

• Sales Tax Detail (scope=sales) = output VAT: invoices, sales receipts, credit notes, and the output side of reverse charge.
• Purchase Tax Detail (scope=purchases) = input VAT: bills, expenses, supplier payments, debit notes, and the input side of reverse charge.
• A tax with scope Both follows the document it is on, so it appears under sales on an invoice and under purchases on a bill.

The report uses exactly the same figures as the VAT return, so use it to check a return line by line. Void and cancelled documents are excluded.

Adjustments and their signs

Credit notes and debit notes reduce VAT in their direction:

The sign is applied consistently (since 2026-09-30), including when a note is later reversed, so a credit note never increases output VAT.

VAT returns

A VAT return covers one period (monthly or quarterly), computes output VAT minus input VAT from the ledger, and records how the balance was settled.

Statuses

There is no reopen action for a filed return.

Create a VAT return

1. Go to Reports → Taxes → VAT Returns and click New VAT Return at the top right.
2. The New VAT Return form shows a fixed period:
   • Period Start: the day after your last return ends ("Auto-calculated based on last return"). For your first return, it is the VAT first period start from your tax settings, or the start of the current month/quarter.
   • Period End: end of that month or quarter, based on your filing frequency.
   • Period Type: Monthly or Quarterly ("From organization tax settings"). The banner shows the frequency and your VAT # (TRN). The dates are read-only.
3. Click Create Return. You see "VAT return created." and the return opens as Draft.

If no tax settings exist, the form shows "No VAT settings configured. Please configure tax settings first." and Create Return is disabled.

Setting the first VAT period. In Organization setup step 2 (tax regime) there is a First VAT Period Start date field. Its note reads "Used before the first VAT return. Set the first period assigned to your organization. Existing returns determine subsequent periods; this does not change them." Set it to the first day of the period the FTA assigned you (for example 1 October 2026 for a quarterly filer on the Oct-Dec cycle) before you create your first return; once a return exists, the next period always starts the day after the last return ended and this date is no longer used. The field is optional; without it the first return starts at the beginning of the current month or quarter.

Period rules

• Periods are consecutive: each new return starts the day after the previous one ends, so returns do not overlap or leave gaps.
• The same period cannot be created twice.
• Only Monthly and Quarterly returns are supported. If your filing frequency is set to yearly, creating a return fails; switch the frequency to monthly or quarterly.
• A movement belongs to the period by its tax date.

Review a draft return

The return page shows:

• Period (start → end), period type and status.
• Cards: Output VAT, Input VAT, Reverse Charge (information only, already inside Output VAT), and Opening VAT Credit if a credit was carried in.
• Net VAT Payable = Output VAT − Input VAT − Opening VAT Credit. Red means you owe VAT; green means a credit. (The caption under it reads "Calculated as Output - Input + Reverse Charge", but reverse charge is not added a second time.)
• Sales VAT Breakdown and Purchase VAT Breakdown tables: Tax Code, Rate, Base, VAT, Gross per tax. Empty tables show "No sales VAT activity." / "No purchase VAT activity."
• Related journals at the bottom.

Check the figures against VAT Detail by Rate for the same dates before filing.

File the return

1. Open the draft return.
2. Click File VAT Return at the top right of the period card and confirm "File this VAT return? The VAT control balances will be posted to the settlement journal and the return can no longer be edited."
3. You see "VAT return finalized." and the status becomes Filed.

Filing:

• freezes the totals and breakdown lines;
• posts a "VAT Settlement - Control" journal that clears the period's VAT Input and VAT Output balances into VAT Control;
• posts a "VAT Transfer to Suspense" journal that moves the Control balance into VAT Suspense.

Both journals are dated the period end. Filing in SolaCount records the return in your books; submit the actual return on the FTA EmaraTax portal yourself.

Filing is blocked if the period end falls in a closed or locked accounting period, and nothing is written. If VAT Control or Suspense accounts are missing you see "VAT Control or Suspense accounts are not configured." If your organization requires approval for filing VAT returns, the action is routed through approval first.

Pay the VAT due

When Net VAT Payable is positive, the Settle VAT Return section shows:

1. Bank/Cash Account — pick an active, postable bank, cash or asset account (Select account...).
2. Click Pay and confirm "Record payment of this VAT return? A payment journal entry will be posted from the selected account."
3. You see "VAT settlement recorded." Status becomes Settled (Paid & Settled).

The journal (reference PAYMENT-VAT-{id}) is dated today: Dr VAT Suspense, Cr Bank.

Claim a refund or carry the credit forward

When Net VAT Payable is negative (a credit), choose one:

• Process Refund: pick the Bank/Cash Account, click Process Refund and confirm "Record the refund for this VAT return? A refund journal entry will be posted to the selected account." Journal REFUND-VAT-{id}: Dr Bank, Cr VAT Suspense.
• Carry Forward: click Carry Forward AED x ("Credit will offset future VAT") and confirm "Carry this VAT credit forward to the next period? The return will be marked as settled." You see "VAT credit carried forward to next period." The next period's return is created (or updated) as a draft with that amount as Opening VAT Credit, and this return shows Carried Forward with Carried Forward Amount and a View next period link.

A liability cannot be carried forward:

Cannot carry forward a liability balance. You must pay the difference.

Retrying and error messages

Settlement and carry-forward are safe to retry. If a request times out, reopen the return and check its status rather than submitting again. Submitting the same settlement again (same account, same date) returns the existing journal instead of posting a second one; carrying forward twice does not double the opening credit.

A closed or locked accounting period on the settlement date also blocks payment and refund, with no partial writes.

Tax registration numbers (TRN)

For UAE organizations, your organization's TRN must be exactly 15 digits, otherwise saving fails with:

A UAE tax registration number must contain exactly 15 digits. Format validation does not verify registration.

SolaCount checks the format only; it does not confirm the number with the FTA.

Worked example: Al Noor Trading LLC, Q3 2026

Al Noor Trading LLC (Dubai, TRN 100123456700003) files quarterly. Period: 2026-07-01 → 2026-09-30.

1. Sales invoice, AED 20,000 + 5% VAT (SR Standard Rated):

2. Credit note for a return, AED 1,000 + 5%:

3. Supplier bill, office supplies AED 8,000 + 5%:

4. Imported software service from a UK supplier, AED 2,000, Reverse Charge (Purchases) 5%:

5. Export sale, AED 5,000, Zero Rated: Dr Accounts Receivable 5,000, Cr Sales 5,000. No VAT line, but the AED 5,000 base appears on the return at 0%.

The return

Filing clears the period VAT into VAT Control and then into VAT Suspense, leaving AED 550.00 credit on VAT Suspense.

Paying on 2026-10-20 from Emirates NBD Current:

If input VAT had been AED 1,300 instead, Net VAT Payable would be −250.00: choose Process Refund or Carry Forward AED 250.00, and the Q4 return would open with Opening VAT Credit 250.00.

Permissions and plan

Owners have full access. Accountant (member) roles get vat_returns.* by default. VAT returns also need the VAT Returns feature and VAT enabled. If a button or menu item is missing, ask an owner or admin to check your role in Team access (see Permission matrix).

Tips and common problems

• Check before you file. Run VAT Detail by Rate for the same dates; the figures match the return exactly.
• Lock the period after filing. Filing does not stop new postings dated in that period, and a filed return does not pick them up. Lock the period under Fiscal years and lock dates once the return is filed.
• Late document in a filed period? Date the correction in the current open period so it lands in the next return.
• "VAT amount cannot be zero..." You picked a positive-rate tax but the line VAT is 0. Use Zero Rated, Exempt or Out of Scope for zero-VAT lines.
• Rate cannot be changed. The tax is on posted documents. Create a new tax and deactivate the old one.
• Reverse charge increased my supplier balance? It should not; only the net is payable. Check that the line uses a tax with Reverse Charge ticked.
• Non-recoverable VAT. When a purchase tax is not claimable, its VAT is added to the expense or inventory cost instead of VAT Input. Taxes you create on the New Tax form with a rate above 0 for purchases are always claimable, so ask support if you need a non-claimable positive-rate tax.
• Create Return fails with a yearly frequency. Switch the filing frequency to monthly or quarterly.
• Invoices without VAT. If VAT is disabled for the organization, documents carry no tax and VAT pages are hidden.

Related

• Setup — tax regime, VAT number and default taxes
• Settings — Taxes, Account Defaults (VAT Posting Accounts)
• Invoices, Credit notes, Sales receipts — output VAT
• Bills, Expenses, Debit notes — input VAT and reverse charge
• Customers, Suppliers — TRN fields
• Multi-currency — exchange rates in VAT reporting
• Reports — Taxes report group
• Fiscal years and lock dates — closed periods and VAT returns
• Chart of accounts — VAT accounts
• Permission matrix, Accounting rules