Credit note Issue

Clearance and Reporting
1

When an invoice line is zero-rated for VAT, and an allowance is applied at the header level that includes VAT, the total tax amount on the invoice may become negative. How should this invoice be posted?

Example:
Imagine an invoice where a product (zero-rated) is priced at 100 SAR, and a header-level allowance (including VAT) of 20 SAR is applied. If the VAT rate is 15%, the tax amount on the zero-rated line would be 0 SAR. However, the allowance would likely include 15% VAT, which, when deducted, results in a negative tax amount of -3 SAR (-20 * 15%). The invoice should be posted as a normal invoice with the negative tax amount of -3 SAR

2

@Amitaujas invoice with negative values are rejected. Where invoice lines are zero rated, discount can only be with zero rated VAT category. It is unusual for discount to merit a different VAT category as compared with VAT category of the underlying supply.