Taxable value
In one sentenceThe amount on which VAT is calculated: the price of the supply after the discounts given on the invoice and before adding VAT.
Simply put
You do not calculate VAT on the list price, but on what the customer actually pays before VAT after the discount.
If the consideration is not in cash or is between related parties, the market value may be used instead of the stated amount.
Worked example
A pharmacy sold measuring devices at a price of 10,000 SAR and gave the customer a discount of 1,000 SAR on the same invoice.
Price before discount10,000 SAR
Taxable value after discount10,000 − 1,000 = 9,000 SAR
VAT 15%9,000 × 15% = 1,350 SAR
Invoice total10,350 SAR
Formula: Taxable value = price − discounts on the invoice, and VAT = taxable value × 15%
Don't confuse it with
VAT chargedThe taxable value is the base, and the VAT charged is the result after multiplying the base by 15%.