This article explains why Qoyod requires selecting an exemption reason code (BT-121) when issuing an Invoice with Zero-Rated VAT line items, and how to choose the right code.
When the Reason Code Prompt Appears
When issuing or approving an Invoice that contains a line item classified under “Zero-Rated VAT 0%”, the system displays a “Missing Exemption Reason” window asking you to select a reason code (BT-121) before saving.
Why This Is Required
Phase Two of E-Invoicing requires, per the Zakat, Tax and Customs Authority (ZATCA), the inclusion of BT-121 (exemption reason code) for any zero-rated line item. Without the code, the Invoice may:
- Be rejected by the Fatoora platform.
- Trigger a warning from the authority.
Steps
- When creating an Invoice and adding a line item with a 0% zero tax rate, click “Save and Approve”.
- A “Missing Exemption Reason” dialog appears showing:
- The reason for the prompt: BT-121 is mandatory for Zero-Rated VAT Invoices.
- Affected Line Items: the list of line items affected by this prompt.
- Select the appropriate reason code from the dropdown (such as: export, international transport, medicines, etc.).
- Click “Save & Continue” to complete saving.
- Or “Cancel” to go back and edit the line items.
Notes
- The Invoice cannot be saved as “Approved” without selecting a reason code.
- The reason code appears in the XML file sent to ZATCA within the BT-121 field.
- The code is stored at the line item level, so if you have more than one zero-rated line item, you must select a code for each.
