Module 3 · Core · 9 min read

The purchase invoice and input VAT

You will be able to: Enter a supplier's bill and explain the entry Zeyto posts; Say why Supplier Invoice No and Date are required; Explain how the invoice Date drives the VAT return month; Describe reverse charge and the voucher used to declare it.

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The purchase invoice (PI) records the supplier's bill. Submitting it books the cost, the input VAT you can claim back and the amount you owe the supplier. In the UAE, standard-rated supplies carry VAT at 5%; the VAT you pay on business purchases is input VAT and is set against the output VAT you charge customers in your VAT return.

Record a supplier invoice with input VAT · 1:10 · no sound yet, captions are on

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1. Open Purchase, then Purchase Invoice 2. Press + New Purchase Invoice 3. Pick the supplier 4. Add the items you bought 5. Type the Supplier Invoice No (required) 6. Open Accounting impact to preview the VAT Input entry 7. Press Submit: stock, payable and input VAT post together

A new Purchase Invoice with the supplier chosen, the required Supplier Invoice No and Supplier Invoice Date fields, and two item lines. — Supplier, Supplier Invoice No and Supplier Invoice Date are required.

Filling in the form

Supplier: required. Customers cannot be chosen.
Supplier Invoice No and Supplier Invoice Date: required, even to save a draft. They are the supplier's own bill number and date, and you need them to support the input VAT claim.
Date: the invoice date in your books. It decides the accounting period and the VAT return month.
Create Against: Independent, Purchase Order or Goods Receipt. Several goods receipts can go on one bill.
Update Stock: ticked by default, so the invoice adds quantities to the warehouse. Untick it when stock is received on a separate document or you are only recording the bill. Lines that come from a goods receipt are not affected.

Check Qty and Rate against the supplier's bill, then open the Accounting impact section before pressing Submit. Rate is without VAT; each line has a VAT code and Zeyto works the VAT out line by line.

What it posts

Debit Inventory for stock lines and Expense for service lines, both before VAT. Debit VAT Input for the VAT. Credit Payables for the total. If the goods were already received on a GRN, the debit goes to clear Goods Received Not Invoiced instead of adding stock again. If the invoice price differs from the GRN, the difference goes onto the stock still held, or to purchase price variance for goods already sold. The VAT is recorded as input VAT by tax code, in the month of the invoice Date.

A bill with goods and a serviceThe supplier bills 40 units at AED 25 (AED 1,000) and transport of AED 200, both at 5%. VAT is 50 on the goods and 10 on transport, so the total is 1,260. Posting: debit Inventory 1,000, debit Expense 200, debit VAT Input 60, credit Payables 1,260. The VAT return for the month of the invoice Date shows AED 60 of input VAT.

Watch outZeyto does not stop you entering the same supplier invoice number twice. Search the Supplier Inv column in the Purchase Invoices list first. If the VAT return for the invoice Date is already filed, Submit, Amend and Cancel are refused; use a date in an open month.

Reverse charge (RCM)

On some purchases the buyer, not the supplier, accounts for the VAT; a common case is a service bought from a supplier outside the UAE. The supplier's bill shows no VAT. A purchase invoice line on a reverse-charge tax code records the value with no VAT and does not declare the VAT. You declare it with a voucher under Purchase, RCM Self-Accounting.

The RCM Self-Accounting voucher form for reverse charge purchases with the voucher type and taxable base fields. — Purchase, RCM Self-Accounting: the voucher that books reverse charge VAT.

Reverse charge voucherYou buy AED 4,000 of consulting from an overseas firm. VAT at 5% is 200. The voucher posts four entries: debit the expense 4,000, debit VAT Input 200, credit VAT Output 200, credit Payables 4,000. You owe the supplier only the 4,000, and if the input VAT is fully recoverable the VAT effect nets to zero. Enter the supplier's invoice number and date in the voucher too.

TipPaying while you enter the bill is allowed: use the Payment Details buttons (Cash, Bank and so on). Only the unpaid rest is credited to Payables.

Try it in the demo

Open demo.zeyto.app/demo-app/ and sign in with the public demo user (admin, password demoAdmin123).
Open Purchase, Purchase Invoice and press + New Purchase Invoice.
Notice which fields are required: Supplier, Supplier Invoice No and Supplier Invoice Date.
Add a line and open the Accounting impact section to read the preview before submitting.
Open Purchase, RCM Self-Accounting and look at the voucher type and the Taxable Base field.

Open the live demo

Public demo company, sign in as admin / demoAdmin123. Data refreshes nightly.

Key takeaways

A PI posts cost, input VAT and the amount owed to the supplier.
Supplier Invoice No and Date are mandatory and support the VAT claim.
The invoice Date decides the VAT return month.
Reverse charge VAT is declared with an RCM voucher, not by the invoice.

Check yourself

5 questions on this lesson. Not timed, not the exam, and you can try again. Score 60% or more, and read the lesson, to complete it.

1. Which fields are required on a purchase invoice in addition to the supplier?

2. The Date on a purchase invoice decides the VAT return month in which the input VAT is recorded.

3. A bill has goods of AED 1,000 and transport of AED 200, both at 5% VAT. What is debited to VAT Input?

4. A reverse-charge purchase has a taxable base of AED 4,000 at 5%. Which entry is part of the RCM voucher?

5. A purchase invoice line on a reverse-charge tax code declares the VAT on its own; no extra voucher is needed.

Previous: Purchase orders and goods receipts Next: Freight, customs and landed cost

Practice questions for this module · Printable study sheet