1Issue 3 | May 2026

Reporting Under the Cash Accounting Basis A Taxable Person using the cash accounting basis: y Is required to declare and pay Output VAT on sales during the tax period in which payment is actually received from Customers (to the extent of the amount received), regardless of the tax point that would apply under the invoice basis. y Is entitled to deduct Input VAT on purchases only when payment is made to the Supplier (to the extent of the amount paid). The time of supply (tax point) for each transaction does not change merely because the Taxable Person applies the cash accounting basis. A Taxable Person using the cash basis must still issue tax invoices in accordance with the general rules, meaning invoices must be issued within 15 days following the month in which the supply occurs (based on the tax point). Applying the cash accounting basis affects the calculation of the net VAT due to ZATCA. The Authority requires the Taxable Person to complete the VAT return based solely on amounts actually received from Customers and payments actually made for purchases during the relevant tax period. VAT Return Form Fields Box No. Field Name VAT Return (Cash Accounting Basis) VAT on Sales Standard-rated sales Includes: y Supplies made during the current tax period where payment was received during the current period. y Supplies made in previous periods where payment was received during the current period. y Current supplies paid in advance during the current period, whether the supply has been made or the tax invoice has not yet been issued. y Partial payments received during the current period. Does not include: y Supplies for which payment has not yet been received. Standard-rated sales to government entities (15%) Sales where the State bears the VAT In addition to the above, where Output VAT on the sale has not yet been declared in the VAT return. Zero-rated domestic sales Exports Exempt sales Total sales VAT on Purchases Standard-rated purchases (15%) Includes: taxable supplies received where the following conditions are met: y Payment has been made. y A tax invoice has been received during the current period for payment. Standard-rated imports (15%) - VAT paid at import Includes tax paid to ZATCA on imports during the period (for transactions accounted under the invoice-based method). Standard-rated imports (15%) - subject to the Reverse Charge Mechanism Includes tax on imports and supplies received from non-resident Suppliers in the Kingdom (for transactions accounted under the invoice-based method). Zero-rated purchases As indicated in Box 7, no Input Tax is claimed on the purchase in the tax return. Exempt purchases Total purchases Total VAT due for the current tax period Adjustments for previous periods VAT carried forward from previous periods Net VAT payable/ refundable Example 12: A specialized store selling office supplies, whose annual turnover exceeds SAR 1,000,000, applies for approval to use accounting in accordance with the cash basis. ZATCA approved its request effective from 1st January 2019, and the store filed the tax return. During the tax period from January to March 2019, the store made the following categories of taxable supplies: 1. Sale of products for which a tax invoice was issued and the amount was paid; 2. Sale of products for which a tax invoice was issued and the amount was not paid; 3. Sale of products for which a tax invoice has not yet been issued, but the amount was received. The store declares Output Tax for categories (1) and (3) in Box 1 of the tax return. Category (2) must be declared as Output Tax on the sale later, upon receipt of the amount from the Customer. During the same tax period, the store incurred the following costs on purchases: 1. Purchase of goods and services for which invoices were received and the amount was paid; 2. Purchase of goods and services for which invoices were received and the amount was not paid; 3. Payment of an advance for inventory purchase orders to be delivered to the store on 15th February 2019. The store may deduct the tax incurred on purchases; however, it declares only categories (4) and (6) in the tax return ending on 31st March. The Implementing Regulations determine the rules to be followed for changing the accounting method from cash basis accounting to invoice basis accounting, and vice versa(24). (24)  Article 46, Implementing Regulations 6. Adjustment of Consideration