Credit note
In one sentenceA document issued by the seller to reduce the value of a previous invoice because of a return or a later discount, which reduces the corresponding output VAT.
Simply put
You do not edit or cancel the original invoice after issuing it; instead you issue a credit note that refers to it and shows the reduced amount and its VAT.
The note is subject to the same e-invoicing requirements as the original invoice.
Worked example
An appliance store sold goods to a customer worth 10,000 SAR with VAT of 1,500 SAR, then the customer returned part of them worth 2,000 SAR.
Value of the return2,000 SAR
VAT on the return 15%2,000 × 15% = 300 SAR
Credit note2,000 + 300 = 2,300 SAR
Output VAT after the note1,500 − 300 = 1,200 SAR
Reduction in output VAT300 SAR
Formula: VAT on the note = reduction amount × 15%
Don't confuse it with
Debit noteA credit note reduces the invoice and its VAT; a debit note increases them.
in FullScreen ERP
The e-invoicing module issues credit and debit notes for returns and post-sale discounts. E-invoicing