UAE VAT reporting - update for Dynamics 365 F&O, Spring 2018 (v.8.0)

UAE country specific functionality is activated through configuration Localized functionality region in configuration of Legal entity. In case Localized functionality region is detected using company address make sure primary address of legal entity has country code set to ARE.

Learn more about patterns used in localized solutions at Localization and regulatory features website.

VAT Declaration and FAF audit file require additional information which is required to be setup in configuration of legal entity. Open Organization administration >> Organizations >> Legal entities and in section Value added tax select following information:

• Taxable person name - electronic VAT reports require name of the taxable person. Name in English and Arabic will be populated in reports. Defining Party in Global Address Book use Known As field to enter names in other language like Arabic in case Legal Entity UI language is set to English.
• Tax agency name, Tax agent name - Tax Agency Name, Tax Agency Number, Tax Agent Name and Tax Agent Approval Number are required in electronic reporting in case VAT report are prepared by contracted tax agent - vendor.
• Declarant name - Information about person preparing VAT declaration will be included in the electronic report.
• VAT refund required - Select this option if a VAT refund is due and company requests to receive VAT refund.
• Profit margin scheme - Company should mark this option if they operate in special business scheme using Profit Margin scheme.
• VAT on behalf of another person - Mark this option if your company operate as an agent who pays import VAT on behalf of another taxable person.

Learn more about VAT reporting requirements from instructions at UAE Federal Tax Authorities website in section dedicated to Requirements Document for Tax Accounting Software.

Federal Tax Authority needs to be setup as sales Tax authority. Once vendor account will be associated with tax authority system will create automatic payments to vendor payables during the settlement process. 

Navigate to Tax >> Sales tax >> Sales tax authorities and setup address information of your FTA office together with selecting UAE specific report layout which corresponds with electronic VAT declaration. Find more details in following configuration example:

With Configured Tax Authority you may proceed to associate Sales tax settlement periods with the tax authority you have just configured and Sales tax codes.

VAT Declaration electronic report is based on configuration of specific sales tax UAE report layout which should be selected as default in Tax Authority setup.

Follow procedure of setting up Sales tax codes relevant to profile of your company business in Sales Tax section of documentation.

To run UAE report layout representing the electronic VAT declaration it is necessary to setup appropriate numbers of reporting codes associated with each VAT declaration reporting amount.

Navigate to Tax >> Indirect Tax >> Sales Tax >> Sales Tax Reporting Codes and setup sales tax reporting codes and updated later sales tax codes accordingly with instructions from following table:

In the result Sales tax reporting codes configuration should look like on following image:

Configure Sales tax codes associating them with relevant Sales tax reporting codes in Report setup section of each relevant to your company business Sales tax code using instructions from column Report setup provided in the above table.

In cases when a Taxable Customer is obligated to pay tax on a supply received from a non-resident supplier, VAT should be calculated and paid to tax authorities VAT Reverse Charge basis. The customer must calculate and report the output tax on the supply and relevant input tax.

In order to use reverse charge functionality, it is necessary to select the Reverse charge option in the General ledger parameters form (see screenshot below).

Before setting the sales tax group for reverse charge, you should set up two sales tax codes: one for input sales tax and other for output sales tax. Output sales tax code should be set up with a negative value. For more information, see Setting up sales tax codes. 

It is necessary to select the Reverse charge check box on the line with the negative sales tax rate (see screenshot below) in the reverse charge sales tax group. 

When posting the invoice line with reverse charge sales tax group, the system will create two sales tax transactions: one with Sales tax receivable tax direction and other with Sales tax payable tax direction. 

Implementation of VAT reporting for United Arab Emirates is based on Electronic Reporting configurations.

Learn more about capabilities and concepts of configurable reporting at Electronic reporting website.

For PROD and UAT environments please follow a procedure of downloading electronic reporting configurations according to instructions in this article: Download Electronic reporting configurations from Lifecycle Services.

Following configurations must be installed in order to use VAT declaration and FTA VAT audit file functionality in UAE localization:

In DEV or TEST environment with direct access to deployment VM is available you can download configurations, from http://lcs.dynamics.com.  After login into the LCS portal, select Shared asset library:

In Shared asset library select GER configurations, choose required configurations as listed in above table and download to local disc.

In the system session navigate to Electronic reporting workspace select Reporting configurations >> Exchange >> Load from XML file and upload all files in order listed in the above table.

With all configurations uploaded following tree of configurations should be present in the system:

To generate VAT declaration report in Excel format, use standard procedure for reporting sales tax for settlement reporting period to settle taxes and print VAT declaration report.

To generate VAT Declaration after settlement is done for a period navigate to: Tax >> Sales Tax Inquires >> Sales Tax Payments select required sales tax payment and press Print report button on action pane.

Follow VAT declaration report dialog and fill in required information.

The browser specific dialog will open with recommendation to save downloaded VAT declaration excel file to local disc. Save and verify content of reported data inside of the Excel spreadsheet.

According to FTA accounting systems requirements electronic reporting file cannot be edited after generation from system. In case corrections of reported data needs to be done it has to happen in the system. After corrections proceed with generating new reporting file. 

After successful and final validation proceed with procedure of file uploading to FTA e-Tax portal using procedures specific to your company registration with FTA.

In case FTA VAT Audit file has been requested follow dialog questions after running generation of FAF file at Tax >> Declarations >> FAF Declaration. 

In case you expected large volume of transactions is scope of audited period, you can decide to deliver for FAT audit multiple files. Consider running the FAF file generation in background with batch processing and dividing audited periods into smaller intervals months, weeks or days periods.

With UAE localization package of functionality there are included Sales Invoice and Credit notes printouts in layout specified in FTA requirements for accounting systems. See following example of Free Text Invoice printout:

Printing in two languages was accommodated in the new printouts. System will print two Invoice printouts, first in language of user interface and simultaneously second printout will be generated in language of a customer in case those two languages are different.

To achieve consistent printout results other data in the system should be setup using translations like Name, Description of items in different languages in the Released product form. Additionally Sales tax descriptions and Exempt code should also be considered for setup with translations.

How to obtain the Microsoft Dynamics 365 for Finance and Operations updates files

This update is available download and installation from the Microsoft Dynamics Lifecycle Services (LCS). Follow procedure of Download updates from Lifecycle Services searching for Issue number 3950081.

Also see additional information about hotfix deployment procedure

• Apply updates to a cloud environment
• Install a metadata hotfix

Prerequisites

You must have the following product and updates installed to apply this hotfix:

• Microsoft Dynamics 365 for Finance and Operations, Enterprise edition,  spring 2018 release (v.8.0)

• KB 4342001 - Electronic reporting (GER) and Tax Engine cumulative update 3 (binary part)

• KB 4342002 - Electronic reporting (GER) and Tax Engine cumulative update 3 (application part)

You must restart the Application Object Server (AOS) service after you apply the hotfix.

If you are encountering an issue downloading, installing this hotfix, or have other technical support questions, contact your partner or, if enrolled in a support plan directly with Microsoft, you can contact technical support for Microsoft Dynamics and create a new support request. To do this, visit the following Microsoft website:

https://mbs.microsoft.com/support/newstart.aspx

You can also contact technical support for Microsoft Dynamics by phone using these links for country specific phone numbers. To do this, visit one of the following Microsoft websites:

Partners

https://mbs.microsoft.com/partnersource/resources/support/supportinformation/Global+Support+Contacts

Customers

https://mbs.microsoft.com/customersource/northamerica/help/help/contactus

In special cases, charges that are ordinarily incurred for support calls may be canceled if a Technical Support Professional for Microsoft Dynamics and related products determines that a specific update will resolve your problem. The usual support costs will apply to any additional support questions and issues that do not qualify for the specific update in question.