VAT refund
In one sentenceThe business recovering the difference when its input VAT exceeds its output VAT, either by requesting a refund from ZATCA or by carrying it forward to later periods.
Simply put
This usually happens in periods of heavy purchasing, when buying expensive equipment, or for exporters, because their sales are at 0%.
ZATCA may review the purchase documents before paying out the amount, so keep valid tax invoices for everything you deducted.
Worked example
A factory bought a new production line in a period with low sales.
Output VAT5,000 SAR
Input VAT12,000 SAR
Net5,000 − 12,000 = −7,000
Balance refundable or carried forward7,000 SAR
Formula: Credit balance = input VAT − output VAT
Don't confuse it with
Credit noteA credit note reduces a customer's invoice, while a refund concerns the net position of the return with ZATCA.