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g. What if the amount paid in advance is more than that is being adjusted?
In case the amount paid in advance is more than the amount of the subsequent invoice
that is being adjusted, the taxpayer has the option either to provide the full value on
which VAT was paid in advance (though being higher than the subsequent invoice) or to
limit the adjustment to the value of the current invoice. Both options are valid and XML
will not be rejected just because the advance payment value is higher than the current
invoice value.
For example, if the advance was received on 1 Jan 2023 for SAR 115,000 (100,000
+ 15,000 VAT) and this is being adjusted from a subsequent invoice of SAR 92,000
(80,000 + 12000 VAT) on 1 July 2023, then <cbc:PrepaidAmount> (BT-113) can either
be provided with the full value of advance payment as 115,000 which will result in
Amount Due for Payment as -23,000 or it can be limited to 92,000 resulting in Amount
Due for Payment as 0. Both options are valid, and decision may be taken based on
reconciliation process followed by the taxpayer.
Please note that, in the above scenario, if the full value of advance payment is adjusted
resulting in negative amount under the Amount Due for Payment and this amount has
to be refunded back to the customer, then a Credit Note for 23,000 has to be issued.
Such Credit Note should also be sent for Clearance / Reporting.
h. Technical details:
Developers may kindly refer to paragraph 9.5 of the XML Implementation Standard
to see the usage of UBL tags for advance payment adjustment. The examples cover
scenarios of one-to-one adjustment and many-to-one adjustments (where advances
received under multiple invoices can be adjusted against one final invoice).
It is important to note that some mandatory UBL tags which must be present in advance
payment adjustment lines with fixed value as “zero” (0) to avoid schema validation
errors or XSD errors. Therefore, it is important for developers to make use of all UBL
tags provided in paragraph 9.5 of the XML Implementation Standard to avoid errors/
warnings related to advance payment adjustments.