How to Set Up Foreign VAT Registrations and Tax Rates

Wafeq allows you to add VAT registrations in countries other than your organization’s primary VAT registration country and set up tax rates specific to these registrations.

This feature is particularly useful for organizations that are VAT-registered in multiple countries, such as an organization registered for VAT in the UAE that also has a VAT registration in Saudi Arabia.

Note: Foreign VAT registrations are available for organizations that need to manage VAT-related transactions across multiple countries.

Adding a Foreign VAT Registration

To add a foreign VAT registration:

1. Go to Settings.
2. Select Organization Settings.
3. Go to Foreign VAT Registrations.
4. Click Edit registrations.
5. Click Add registration.
6. Select the registration type.
7. Select the country where your organization is VAT-registered.
8. Enter the VAT registration number.
9. Select the registration start date.
10. If applicable, enter the registration end date.
11. Click Save.

Once saved, the foreign VAT registration will appear under Foreign VAT Registrations, along with the country, registration number, and registration dates.
 

Adding a Tax Rate for a Foreign VAT Registration

After adding the foreign VAT registration, you can create a tax rate associated with that registration.

1. Go to Settings, then Taxes.
2. Click Add.
3. Under Where is this tax owed?, select Another country.
4. Select the country where the VAT is owed.
5. Enter the tax name.
6. Select the tax type, such as Sales.
7. Enter the tax rate.
8. Under On your [local country] VAT return, report the net amount as, select how the net amount of the transaction should be reported on your local VAT return.
9. Add a description for the tax rate, if needed.
10. Click Save.

Important: The foreign VAT itself is not reported as VAT due on your local VAT return. Instead, you can specify how the net transaction amount should be reported on your local VAT return when setting up the tax rate.

Using the Foreign Tax Rate on Invoices

Once the foreign VAT registration and tax rate have been set up, you can use the tax rate when creating invoices and other relevant transactions.

When creating an invoice, select the appropriate foreign tax rate for the invoice line. Wafeq will calculate the tax based on the configured rate and report the net transaction amount on your local VAT return according to the reporting option you selected when setting up the tax rate.

Example

If your organization is VAT-registered in the United Arab Emirates and also has a VAT registration in Saudi Arabia, you can add the Saudi VAT registration in Wafeq and create a 15% Saudi VAT tax rate.

You can then specify how the net amount of transactions using this tax rate should be reported on your UAE VAT return.

This allows you to manage multiple VAT registrations and their related transactions within the same organization in Wafeq.

Viewing Foreign VAT Transactions in the VAT Report

After setting up the foreign VAT registration and its associated tax rate, transactions related to the foreign registration will also appear in the VAT Report.

The report displays the transactions associated with the foreign registration in the relevant section, making it easier to review these transactions and understand how they are reflected in your local VAT return.

To review these transactions, go to Reports, then VAT Report.