Query about Advance Payments and XML Structure for ZATCA

XML and business rules
1

In our ERP system, we do not issue separate invoices for prepayments. Instead, customers make advance payments, and we record the prepayment amount directly during invoice generation in the frontend. The prepayment is subtracted from the total amount to calculate the net payable amount.
For example, consider the calculation shown below:

  1. Invoice Details:
  • Description: “rrr”
  • Quantity: 2
  • Unit Price: 500
  • Amount (Excl. VAT): 1000
  • VAT @ 15%: 150
  • Amount (Incl. VAT): 1150
  • Prepayment Handling:
  • Total Amount: 1000.00
  • Discount: 50.00
  • Total Before VAT: 950.00
  • VAT Amount: 142.50
  • Amount with VAT: 1092.50
  • Advance Amount: 100.00
  • Net Amount Payable: 992.50
2

@arjun_tech24 it is incorrect to adjust an amount towards advance payment without actually issuing a separate invoice (and accounting for VAT liability at the time of receiving advance).

If you do not issue a separate invoice at the time of receiving advance (it is a violation of Article 53), then you cannot make any adjustment for the same in invoice. The way you have described the process, it hints towards under-reporting of VAT.

1 Like
3

@Ankit_Tiwari

Thank you for the detailed explanation and for highlighting the consequences. I will ensure to correct this process and issue an invoice at the time of receiving the advance payment.