What is VAT Output Tax?
VAT output tax is the value-added tax that a registered taxpayer charges its customers on taxable supplies of goods and services. It is collected on behalf of ZATCA and reported in the VAT return.
How It Works
- Identify each supply as standard-rated, zero-rated, or exempt.
- Apply the appropriate VAT rate to the taxable value of each invoice.
- Issue a VAT-compliant tax invoice with all mandatory fields including the QR code.
- Record output VAT in a dedicated payable account in the ledger.
- Report the output VAT in the periodic VAT return and remit any net VAT due.
Saudi Context
The standard VAT rate in Saudi Arabia is 15%. ZATCA requires electronic invoicing (FATOORA) phase-2 integration for in-scope taxpayers, which transmits each tax invoice including output VAT details to ZATCA in near real time.
Example
A retailer sells goods worth SAR 200,000 in a tax period. Output VAT = 200,000 × 15% = SAR 30,000, recorded in the VAT payable account and reported in the VAT return.