At the end of each tax period, a VAT registered business will either be due to pay tax to the FTA or get a refund depending on the amount of Input and Output tax incurred in that period.
Output VAT is the amount of tax you charge on the sales of your own goods and services both to ordinary customers and other entities if you’re registered for VAT. Input VAT is the amount of value added tax you’ve paid during the purchases of goods and services during a tax period. If the amount of Input VAT you’ve paid is lower than the amount of Output VAT you’ve charged, you’re due a net tax credit for the amount of the difference between those values. If the amount of Input VAT you’ve paid is larger than the amount of Output VAT you’ve charged, you’re due for a tax refund from the FTA. Continue reading →