Value added tax (VAT)
In Arabic ضريبة القيمة المضافة
A tax charged at each stage of supply on the value added, collected by sellers and paid to the tax authority less the VAT they paid on purchases.
In plain words
For a distributor, VAT passes through: charged on sales, paid on purchases, and the difference settled with the tax authority. It is neither revenue nor cost, but mistakes in it are paid for in penalties and lost input tax.
Each line carries its own rate, standard or zero, and the invoice shows net, VAT and total. Output VAT on sales and input VAT on purchases post to their own ledger accounts and are netted for each return period.
The common mistake is working VAT out on the invoice total rather than line by line. Invoices with mixed rates then come out wrong, and rounding differences pile up across thousands of lines.
- Sales, net
- SAR 200,000
- Output VAT on sales
- SAR 30,000
- Purchases, net
- SAR 140,000
- Input VAT on purchases
- SAR 21,000
- VAT payable
- SAR 9,000
In Axon Suite
How Axon Suite handles it
In Axon Suite tax codes and groups set the VAT each line carries, and the invoice posts it to the ledger. A price list can be marked VAT-inclusive, and the VAT is taken out of each line at its own rate.
Feature
VAT-inclusive price lists
Mark a price list as VAT-inclusive and every line priced from it carries the VAT inside the price. Axon Suite takes the VAT out at each line’s own rate, and the document keeps its price terms from quote to order to invoice.
Open: VAT-inclusive price lists