How handle VAT on Shipping Charges

XML and business rules
1

Hi Fatoora Community,

I’m looking for some advice on handling VAT for extra charges like shipping on sales invoices under ZATCA compliance in KSA.

If I have a shipping charge on the invoice along with the main item(s), should I:

  • Add it as a separate line with the standard 15% VAT, or
  • Leave it with no VAT or mark it as exempt?

Appreciate help.

2

You can define the charges at Items level as well as on Document Level.

3

Charges can be Added Similar to Discounts
ChargeIndicator must be true for Charges while it is false in case of discount

	<cac:AllowanceCharge>
		<cbc:ChargeIndicator>true</cbc:ChargeIndicator>
		<cbc:AllowanceChargeReasonCode>DL</cbc:AllowanceChargeReasonCode>
		<cbc:AllowanceChargeReason>Charge</cbc:AllowanceChargeReason>
		<cbc:Amount currencyID="SAR">0</cbc:Amount>
		<cac:TaxCategory>
			<cbc:ID schemeID="UN/ECE 5305" schemeAgencyID="6">S</cbc:ID>
			<cbc:Percent>15.00</cbc:Percent>
			<cac:TaxScheme>
				<cbc:ID schemeID="UN/ECE 5153" schemeAgencyID="6">VAT</cbc:ID>
			</cac:TaxScheme>
		</cac:TaxCategory>
	</cac:AllowanceCharge>
4

@shakirpm VAT treatment on shipping charge is something you need to check with your tax team / consultants as it may depend on local or international freight. From E-Invoicing you can show shipping charge as a separate line item. If your ERP system historically treats shipping charges within same line item as the underlying supply then you can include this as AllowanceCharge with indicator “true” in invoice line for the main supply.