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UAE VAT in Odoo: taxes, TRN, reverse charge and the VAT201 return

How Odoo's UAE localization handles VAT in Odoo 18 and 19: the 5%, zero-rated and exempt taxes, TRNs on invoices, reverse charge, and the VAT201 return report.

By Muhammad Salman Ali Khan, Founder, Knova Digital Solutions · Published 8 October 2026 · 8 min read · UAE, VAT, Odoo configuration, Odoo hosting

Odoo handles UAE VAT through its United Arab Emirates fiscal localization: install it (or pick the UAE as your company's country when you create the database) and you get a UAE chart of accounts, the 5% standard, zero-rated, exempt, import and out-of-scope taxes, fiscal positions for cross-border sales, reverse charge, invoices in English and Arabic, and a VAT return report in the FTA's VAT201 layout. What remains is your part: entering your Tax Registration Number (TRN) and your customers' TRNs, choosing the right tax on each product and contact, and reviewing the return before you file it with the Federal Tax Authority (FTA).

This is general information, not tax advice. VAT rules are set by the UAE Ministry of Finance and the FTA and can change. Confirm how they apply to your business with the FTA or your tax adviser. The sources are listed at the end.

The UAE VAT basics that shape the setup

According to the FTA:

• The standard rate is 5%. Some supplies are zero-rated (0%, with input VAT still recoverable) and some are exempt (no VAT, and no recovery of the related input VAT).
• Registration is mandatory when taxable supplies and imports exceed AED 375,000 over the previous 12 months, or are expected to in the next 30 days. Voluntary registration is possible above AED 187,500. Registration gives you a TRN.
• Returns are due within 28 days of the end of each tax period, with the payment.

Everything below is about making Odoo produce the numbers and documents those rules require.

The UAE localization modules

Odoo's documentation lists these modules:

In short: the taxes and accounts are available in Community, but the reporting modules are not in Community's public code. If you want the VAT201 report produced inside Odoo, plan on Odoo Enterprise, or on a third-party module. Our Community vs Enterprise guide explains the rest of that choice.

Taxes, tax groups and fiscal positions

The localization creates the taxes the FTA defines, as Odoo's 19.0 documentation describes them:

• Standard VAT (5%) on most goods and services supplied in the UAE.
• Zero-rated (0%), for example qualifying exports and international transport.
• Exempt, for example some financial services and local passenger transport.
• Import VAT, where only the VAT amount is declared, not the import's base amount.
• Out of scope, for transactions outside UAE VAT altogether.

Set the right tax as the default on each product, and let fiscal positions swap it automatically for customers abroad or other special cases. Odoo's 18.0 documentation adds a detail that saves trouble at period end: set the tax accounts (current payable, current receivable and advance payment) only on the 5% tax group, because the other groups don't need closing.

The localization also fetches exchange rates from the Central Bank of the UAE, under Accounting → Configuration → Settings → Currencies, which matters for the next section.

TRN and what an invoice must show

Article 59 of the VAT Executive Regulation lists what a tax invoice must contain. In summary:

• the words "Tax Invoice";
• your name, address and TRN, and the customer's name, address and TRN if the customer is registered;
• a sequential or unique invoice number, the date of issue, and the date of supply if different;
• a description, and for each line the unit price, quantity, tax rate and amount payable in AED;
• any discount, the gross amount payable in AED, and the VAT in AED, with the exchange rate used when the invoice is in another currency;
• for reverse-charge supplies, a statement that the customer must account for the VAT, with a reference to the law.

A simplified invoice, with fewer details, is allowed when the customer isn't registered, or is registered and the supply is AED 10,000 or less, but never for a reverse-charge supply.

How that maps to Odoo:

1. Enter your TRN as the company's Tax ID, and each registered customer's TRN on their contact.
2. For Arabic and English invoices, enable the Gulf Cooperation Council Format in Accounting → Configuration → Settings, and set each customer's language on their contact.
3. Invoice in foreign currencies if you need to: Odoo's release notes say the invoice PDF shows the amount in the company's currency for foreign-currency invoices, to meet Article 59 (available from Odoo 16).
4. Keep the journal's sequence unbroken; don't delete posted invoices, reverse them with credit notes.

Reverse charge

Under the reverse charge mechanism, the customer accounts for the VAT instead of the supplier: typically a UAE-registered business buying services or goods from a supplier abroad with no UAE VAT registration. In the return, the customer declares the VAT both as output and as input VAT, which usually nets to zero when fully recoverable. Odoo supports this with dedicated reverse-charge taxes, and the VAT return has its own reverse-charge lines.

Check two things on your vendor bills from abroad: that the reverse-charge tax is applied (a fiscal position for foreign suppliers can apply it automatically), and that the bill's amounts are converted to AED at the right rate.

The VAT return (VAT201) in Odoo

With the reporting module installed, the UAE VAT return gathers output VAT, input VAT, reverse-charge VAT, and zero-rated and exempt sales into the FTA's layout. Odoo's documentation says it exports to Excel and PDF for manual submission: Odoo prepares the figures, and you file and pay through the FTA's own systems.

What changed recently, from Odoo's release notes:

• Odoo 19 rebuilt the VAT201 report on the new reporting engine, with updated taxes and tax groups, and limited the import tax calculation to the customs VAT amount.
• Odoo 20 generates the FTA VAT audit file from the general ledger (also available from 19.0), and redesigns the UAE chart of accounts with 6-digit codes.

Before each filing, reconcile your banks, check that every bill has the right tax, compare the report's boxes with your general ledger, and keep the exported report with your records.

Versions, e-invoicing and your hosting

The UAE localization improves with each version, and the coming e-invoicing rules add more. Our UAE e-invoicing guide covers the deadlines and what Odoo offers today, and our upgrade guide explains how to move to a newer version safely.

On Knova Cloud, tax changes don't have to be tried on live books. A staging branch is a neutralized copy of production, so you can change taxes, fiscal positions or invoice layouts, post test invoices and run the return on real data before touching production. Production is backed up daily and the newest backup is restore-tested every week. Knova Cloud hosts Odoo; the VAT setup and the filings stay in your Odoo, with your accountant. If your data must stay in the UAE, Odoo can run on a UAE server you own, managed by us: see Odoo hosting in the UAE.

A short checklist

1. Install the UAE localization (and the reporting module if you file from Odoo).
2. Enter your TRN and your registered customers' TRNs.
3. Set default taxes on products; add fiscal positions for exports and foreign suppliers.
4. Put the tax accounts on the 5% tax group.
5. Enable automatic exchange rates and the GCC invoice format.
6. Test invoices, credit notes, foreign-currency invoices and a reverse-charge bill on staging.
7. Run the VAT201 report, reconcile it with the ledger, then file with the FTA.

Knova Cloud is run by Knova Digital Solutions, an Odoo implementation company in Dubai. For help with the Odoo side of VAT, talk to us or see how we work with businesses running Odoo; hosting prices are on the pricing page.

Sources

• Federal Tax Authority, Registration for VAT and Filing VAT returns and making payments.
• Executive Regulation of Federal Decree-Law No. 8 of 2017 on VAT (Cabinet Decision No. 52 of 2017 and its amendments, English version published by the FTA, PDF): Article 59.
• Odoo, United Arab Emirates fiscal localization, Odoo 19.0 and Odoo 18.0 documentation.
• Odoo, release notes for Odoo 19 and Odoo 20 (United Arab Emirates sections).
• Odoo Community source code, addons/l10n_ae (the reporting modules are not in this repository).

Sources checked on 8 October 2026. Odoo is a trademark of Odoo S.A. Knova Cloud is an independent service, not affiliated with or endorsed by Odoo S.A.