In one sentenceAn indirect tax at 15% imposed on most goods and services, which the business collects from its customers and remits to the Zakat, Tax and Customs Authority (ZATCA).
Simply put
The consumer ultimately bears the tax. The business is an intermediary: it collects the tax on sales, deducts what it paid on its purchases, then remits the difference to ZATCA.
That is why VAT is not, in principle, revenue or an expense for the business. It is recorded in output and input VAT accounts until it is settled in the return.
Worked example
A spare parts store sold a part priced at 1,000 SAR before VAT.
Price before VAT1,000 SAR
VAT 15%1,000 × 15% = 150 SAR
Amount the customer pays1,150 SAR
Formula: VAT-inclusive price = price before VAT × 1.15; VAT within an inclusive amount = amount × 15 ÷ 115
Don't confuse it with
Income taxIncome tax is imposed on the business's profits, while VAT is imposed on the value of the sale itself and borne by the consumer.
in FullScreen ERP
The sales module issues tax invoices and simplified invoices that comply with ZATCA requirements. Sales and POS