Input VAT, expenses and reverse charge

Input VAT is the VAT you pay on purchases and expenses. You recover it by deducting it from output VAT in your return. The conditions are practical ones: the cost must be for your taxable business, the supplier must be registered and charging VAT, and you must hold a valid tax invoice. The FTA's tax invoice guide calls that invoice the primary documentary evidence for recovery. Costs linked to exempt supplies are not recoverable, as the FTA return guide says. Some other items are blocked by law, so ask your accountant about entertainment-type costs.

Recording input VAT in Zeyto

• Purchase Invoice: the supplier's own Supplier Invoice No and Supplier Invoice Date are required, because they are your evidence for the claim. The invoice Date decides the VAT return period.
• Expense Entry (Accounting, Expenses): for rent, fuel, repairs and similar costs that do not come through a purchase invoice. A voucher with VAT to claim needs a supplier and a 15-digit TRN. A line on a 0% code needs neither.
• Purchase Return reduces the input VAT you claimed, in the period of the return.
• A supplier line coded ZR or EX is not mapped to a purchase box; it shows as unmapped in the VAT 201 report with no VAT.
• Taxable Journal: an entry that must reach the VAT return but has no invoice screen, such as a VAT correction.

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A purchase invoice with 5 percent input VAT on each line.

Reverse charge

Normally the seller charges VAT. Under reverse charge the buyer accounts for it instead. The FTA's return guide says services received from foreign suppliers belong in Box 3 (supplies subject to reverse charge), and the VAT you can recover goes in Box 10. A fully taxable business ends up with the same VAT in both boxes, so the net effect is zero, but both lines must appear on the return.

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Settings, RCM Categories.

Imports of goods declared to UAE customs are different: the import VAT is reported in Box 6 (or corrected in Box 7), not Box 3. The recoverable side is again Box 10.

Reverse charge in Zeyto

• Sales side: an item in an RCM category sold to a customer with a 15-digit TRN and a valid declaration is sold with no VAT on the invoice and reported in Box 3. Declarations are recorded in Sales, RCM Declarations.
• Purchase side: use Purchase, RCM Self-Accounting, then + New. It opens a Taxable Journal set to Reverse charge (RCM). You enter one line: the expense account, the supplier, an RCM tax code, the taxable base and the same amount in Debit. Zeyto builds the entry: debit the expense and credit payables for the base, and debit VAT Input and credit VAT Output for the VAT.
• Imports: VAT, Import VAT (Box 6/7). Enter the customs declaration number, customs value and the import VAT shown on the declaration. Zeyto posts a journal that debits VAT Input and credits VAT Output for the same amount.

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VAT, RCM Register: reverse charge purchases and the VAT self-accounted.

Rules change; always check the FTA website.