# VAT rates and categories

> Manage the VAT rates offered on invoice lines, their categories and the exemption reasons written into the e-invoice, and set the default rate.

Source: /help/en/account-and-setup/tax-rates

UAE VAT has one standard rate of 5 % and four other categories that carry no VAT. Alya Books keeps them as VAT rates under Settings; each rate belongs to a category and, for the non-standard ones, carries the exemption reason that goes into the PINT AE XML.

## The categories

| Category | Code | Rate | Typical use |
|---|---|---|---|
| Standard rated | S | 5 % | Most goods and services in the UAE |
| Zero rated | Z | 0 % | Exports, international transport, certain education and healthcare supplies |
| Exempt | E | 0 % | Residential rent, local passenger transport, some financial services |
| Reverse charge | AE | 5 % stated, no VAT charged | Supplies where the buyer accounts for VAT |
| Out of scope | O | 0 % | Supplies outside UAE VAT |

## Manage the rates

1. Go to **Settings → Tax & currency**. The **VAT rates and categories** card lists the rates Alya Books created for you: one each for standard, zero rated, reverse charge and out of scope, and four exempt rates, one per FTA exemption reason (financial services, residential property, bare land, local passenger transport).
2. Click the pencil to rename a rate, translate it, change its **Exemption reason code** and **Exemption reason** (BT-121 and BT-120 in the XML), set it as **Default for new lines** or switch it off.
3. Click **Rate** to add one, for example a second zero-rated entry with a different exemption text for exports. Only one rate is the default.
4. **Default VAT Rate (%)** in the **Tax Configuration** card stays the rate used for new items.

## Where the rates appear

- Every invoice line offers the active rates, with one entry per exempt rate; document discounts offer one entry per category. Picking one sets the rate and the exemption reason on the line; the reason is written once per category into the XML tax breakdown. An exempt line can switch to another FTA reason with the picker under the line.
- The reason text of the **Reverse charge** rate is the fallback narrative; on an invoice the narrative under each reverse-charge line is filled in from the goods type and can be edited there.
- Items pick a category under **Items → Add Item → Tax & Pricing**; the editor applies the matching rate.
- The **VAT Return** page groups issued invoices by category into the boxes of the VAT 201.

## Good to know

- Amounts are in AED with two decimals (fils); VAT is calculated per category and rate on the taxable amount, rounded half up.
- Out-of-scope supplies can also use the document kinds **Out-of-scope invoice** and **Out-of-scope credit note** in the editor's right panel.
- Owners, admins and accountants manage rates; the default rate cannot be deleted.
- The API offers the same list under `GET /settings/tax-rates`.

## Related

- [How VAT is calculated and rounded](/help/en/vat/vat-calculation-and-rounding)
- [VAT 201 worksheet](/help/en/vat/vat-201-worksheet)
- [Add a product or service](/help/en/products/add-a-product)