VAT in Transactions
Zoho Books has a wide range of sales and purchase transactions. Each of these transactions are VAT-compliant, i.e. different VAT treatments can be applied on items while creating transactions for them.
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Sales Transactions
- Quotes
- Retainer Invoices
- Sales Orders
- Delivery Challans
- Invoices
- Recurring Invoices
- Credit Notes
Purchase Transactions
- Expenses
- Recurring Expenses
- Purchase Orders
- Bills
- Recurring Bills
- Vendor Credits
Once you have set up the taxes, customers, vendors and items in your Zoho Books account, you can start creating transactions. Transactions in Zoho Books are affected by the:
- Location from where your business is operating
- Place of supply
- Customer or vendor’s tax treatment
If you are a VAT registered person, here’s how your transactions will incur VAT:
Sales Transactions
| Customer Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt, Out of Scope |
| Non VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt, Out of Scope |
| GCC VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt, Out of Scope |
| GCC VAT Registered | GCC | Zero Rate, Out of Scope |
| GCC Non VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt, Out of Scope |
| GCC Non VAT Registered | GCC | Zero Rate, Out of Scope |
| Non GCC | - | Zero Rate, Out of Scope |
Let us understand each of these scenarios in detail:
Case 1
| Customer Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt, Out of Scope |
Let’s say you sell goods or services to a VAT-registered customer in Saudi Arabia. The supply takes place within Saudi Arabia. In this case, the supply of goods or services can have any one of the following taxes:
- 15%
- 0%
- Exempt
- Out of the scope of VAT
Case 2
| Customer Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| Non VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt, Out of Scope |
Let’s say you sell goods or services to a customer who is in Saudi Arabia and is not registered for VAT. The supply takes place within Saudi Arabia. In this case, the supply of goods or services can have any one of the following taxes:
- 15%
- 0%
- Exempt
- Out of the scope of VAT
Case 3
| Customer Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| GCC VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt, Out of Scope |
Let’s say you sell goods or services to a customer who is registered for VAT in any one of the GCC member countries other than Saudi Arabia. The supply takes place within Saudi Arabia. In this case, the supply of goods or services can have any one of the following taxes:
- 15%
- 0%
- Exempt
- Out of the scope of VAT
Case 4
| Customer Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| GCC VAT Registered | GCC | Zero Rate, Out of Scope |
Let’s say you sell goods or services to a customer who is registered for VAT in any one of the GCC member countries other than Saudi Arabia. The supply takes place within the GCC. In this case, the supply of goods or services is either zero-rated or out of the scope of VAT.
Case 5
| Customer Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| GCC Non VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt, Out of Scope |
Let’s say you sell goods or services to a customer who is in any one of the GCC member countries other than Saudi Arabia and is not registered for VAT. The supply takes place within Saudi Arabia. In this case, the supply of goods or services can have any one of the following taxes:
- 15%
- 0%
- Exempt
- Out of the scope of VAT
Case 6
| Customer Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| GCC Non VAT Registered | GCC | Zero Rate, Out of Scope |
Let’s say you sell goods or services to customer who is in any one of the GCC member countries other than Saudi Arabia and is not registered for VAT. The supply takes place within the GCC. In this case, the supply of goods or services is either zero-rated or out of the scope of VAT.
Case 7
| Customer Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| Non GCC | - | Zero Rate, Out of Scope |
Let’s say you sell goods or services to a customer who is outside any of the GCC member countries. In this case, the supply of goods or services is either zero-rated or out of the scope of VAT.
Purchase Transactions
| Vendor Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt |
| Non VAT Registered | Saudi Arabia | Out of Scope |
| GCC VAT Registered | Saudi Arabia | Goods / Goods & Services - Out of Scope Services - Reverse Charge (Standard Rate) |
| GCC VAT Registered | GCC | GCC VAT/Exempt |
| GCC Non VAT Registered | Saudi Arabia | Goods / Goods & Services - Out of Scope Services - Reverse Charge (Standard Rate) |
| GCC Non VAT Registered | GCC | Out of Scope |
| Non GCC | - | Goods / Goods & Services - Out of Scope Services - Reverse Charge (Standard Rate) |
Case 1
| Vendor Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| VAT Registered | Saudi Arabia | Standard Rate, Zero Rate, Exempt |
Let’s say you buy goods or services from a VAT-registered vendor in Saudi Arabia. The supply takes place within Saudi Arabia. In this case, the supply of goods or services can have any one of the following taxes:
- 15%
- 0%
- Exempt
Case 2
| Vendor Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| Non VAT Registered | Saudi Arabia | Out of Scope |
Let’s say you buy goods or services from a vendor who is in Saudi Arabia and is not registered for VAT. The supply takes place within Saudi Arabia. In this case, the supply of goods or services is out of the scope of VAT.
Case 3
| Vendor Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| GCC VAT Registered | Saudi Arabia | Goods / Goods & Services - Out of Scope Services - Reverse Charge (Standard Rate) |
Let’s say you buy goods or services from a vendor who is registered for VAT in any one of the GCC member countries other than Saudi Arabia. The supply takes place within Saudi Arabia. In this case, the supply of goods, goods associated with services / services associated with goods are out of the scope of VAT.
For services, reverse charge would be applicable along with the standard rate (15%).
Case 4
| Vendor Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| GCC VAT Registered | GCC | GCC VAT / Exempt |
Let’s say you buy goods or services from a vendor who is registered for VAT in any one of the GCC member countries other than Saudi Arabia. The supply takes place within the GCC. In this case, the supply of goods or services is exempted from tax. However, if you want to apply tax on the supply, you would need to create a new tax in Zoho Books for the relevant GCC member country and apply it in the appropriate transaction.
Case 5
| Vendor Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| GCC Non VAT Registered | Saudi Arabia | Goods / Goods & Services - Out of Scope Services - Reverse Charge (Standard Rate) |
Let’s say you buy goods or services from a vendor who is in any one of the GCC member countries other than Saudi Arabia and is not registered for VAT in that particular country. The supply takes place within Saudi Arabia. In this case, the supply of goods, goods associated with services / services associated with goods are out of the scope of VAT.
For services, reverse charge would be applicable along with the standard rate (15%).
Case 6
| Vendor Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| GCC Non VAT Registered | GCC | Out of Scope |
Let’s say you buy goods or services from a vendor who is in any one of the GCC member countries other than Saudi Arabia and is not registered for VAT in that particular country. The supply takes place within the GCC. In this case, the supply of goods or services are out of the scope of VAT.
Case 7
| Vendor Tax Treatment | Place of Supply | Tax Rates |
|---|---|---|
| Non GCC | - | Goods / Goods & Services - Out of Scope Services - Reverse Charge (Standard Rate) |
Let’s say you buy goods or services from a vendor who is outside any of the GCC member countries. In this case, the supply of goods, goods associated with services / services associated with goods are out of the scope of VAT.
For services, reverse charge would be applicable along with the standard rate (15%).
Taxes in Transactions
Let’s learn how VAT is applied in different transactions by taking the example of an invoice.
When you select an item to be invoiced, the default tax rate that you have set for the item will be applied to it.
A comprehensive Tax Summary Report will be displayed at the end, which is a requirement by the ZATCA.
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VAT Filing
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VAT Set-up
Customers and Vendors
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