Taxes

VAT Ready Features in Zoho Books

This section will give you a brief overview about the VAT Ready features that are available in Zoho Books.

Configuring your Zoho Books account

Zoho Books is now VAT ready. As part of the rollout, you will have to follow a few basic steps in order to get your organization ready for VAT.

Enabling Tax Settings

To enable the VAT settings for your organisation in Zoho Books:

Go to Settings on the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Settings.
Check the Is your business registered for VAT? option.
Enter the VAT Label and VAT Registration Number.
If your business involves international trade (importing or exporting outside GCC), check the box Enable trade with contacts outside United Arab Emirates.
Click Save.

Setting up Tax Rates

Once you’re done with the VAT Settings, the next step is to set up the VAT Rates.

There are two default VAT rates:

Standard Rate (5%)
Zero Rate (0%)

To add additional VAT rates:

Click the Tax Rates sub-module on the left menu from the same VAT page.

Tax Rates

Adding New Taxes

To create or add a new tax:

Go to Settings on the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Rates.
Click + New Tax on the top right corner of the page.
Fill in the Tax Name and Rate (%) in the New Tax page.
If the tax is an Excise tax, choose the option This is an Excise tax.
Click Save.

Editing Taxes

To edit an existing tax:

Go to Settings on the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Rates.
Click the Edit button on the right side of the tax to edit.
Click Save.

Deleting Taxes

To delete an existing tax:

Go to Settings on the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Rates.
Click the Trash button on the right side of the tax to delete.
Click OK.

Domestic Reverse Charge

Domestic Reverse Charge (DRC) is a mechanism where the seller does not charge VAT on certain supplies made to a VAT-registered customer. Instead, the customer accounts for the VAT on the supply in accordance with UAE VAT regulations.

Domestic Reverse Charge applies only to specific goods and services supplied between VAT-registered businesses in the UAE.

To apply Domestic Reverse Charge:

The supplier and customer must be registered for VAT in the UAE.
The supply must involve goods or services that are eligible for Domestic Reverse Charge, such as crude oil, natural gas, gold, diamonds, and certain electronic devices. The customer must provide a written declaration confirming their VAT registration.
For electronic devices, the customer must purchase them for resale or for use in producing or manufacturing electronic devices. The customer must provide the supplier with a written declaration stating that the goods are purchased for resale or for producing or manufacturing electronic devices, where required.
The supplier must retain these declarations verify the customer’s VAT registration before the date of supply.

Before you apply domestic reverse charge for your sales transactions in Zoho Books, make sure your organisation is registered for VAT and that your customer is also registered for VAT in the UAE.

Apply Domestic Reverse Charge to Sales Transactions

You can apply Domestic Reverse Charge to sales orders, quotes, invoices and credit notes. Here’s how:

Go to Sales on the left sidebar and select a module (for example, Invoices).
Click + New in the top-right corner.
Select the customer for whom you want to apply the Domestic Reverse Charge in the Customer Name field.
Enter all the other necessary details.
Check the This transaction is applicable for Domestic Reverse Charge (DRC) option.

In the Item Table, under the Tax Column, select Standard Rate or Zero Rate for the items.

Click Save as Draft to save the invoice as a draft, or Save and Send to send it to the customer.

Domestic Reverse Charge in VAT Returns

Once you record a transaction under Domestic Reverse Charge, you can review how it is reflected in your VAT Return before filing. This helps you verify that the transaction and its VAT amounts are reported correctly. Here’s how:

Go to Filing and Compliance on the left sidebar and select VAT Returns.
In the Unfiled VAT Returns tab, select the VAT return for the required tax period.
Scroll down to Box 3 to view the VAT due on supplies subject to Domestic Reverse Charge.
Scroll down to Box 10 to view the VAT claimed for these supplies.

Review these details before filing your VAT Return to ensure that the Domestic Reverse Charge transactions are reported correctly.

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