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Open live demoCredit notes, advances and VAT corrections in the UAE
A posted tax invoice should not be edited. This guide explains how a credit note changes your VAT, how an advance payment is taxed on the day the money arrives, and when to refund, void or amend.
Screenshot from the Zeyto demo company, with sample data.
Credit notes
What a credit note does to VAT
The FTA's guide says errors on a tax invoice are corrected with a tax credit note or an additional tax invoice, not by editing the original. A credit note identifies the original supply and shows the amount credited and the VAT on it. It reduces the supplier's output VAT and the buyer's input VAT.
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In Zeyto, a sales return can be started from the original invoice with Create Against, so quantities and prices carry over and you cannot return more than was invoiced. Cancelling or amending a return is refused when its date falls in a VAT period you have already filed. A supplier credit note, entered as a Purchase Return, reduces the input VAT you claimed in the period of the return.
Choose correctly
Credit note, void or amend: which one?
- Wrong item or quantityAmend the document before it is filed. In Zeyto Garage Pro, for example, you change the lines and the invoice keeps its number.
- Customer returned goods or wants money backIssue a credit note, or a refund at the POS. The sale is kept and a credit note is posted after it.
- Issued by mistakeCancel the document. The posting is reversed, and the reason is kept in the audit trail.
- POS receipt of the open shiftA void removes the original sale as if it never happened, including stock and VAT. A refund keeps the sale and posts a credit note.
Advance payments
VAT on money received before the invoice
An advance is money received before a supply. In the UAE VAT treatment used by Zeyto, the VAT point is the day the money is received, so the advance is its own tax invoice. The VAT inside an advance is 5/105 of the money received. When the final invoice applies the advance, Zeyto takes back exactly that slice, so the supply is taxed once.
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For example, a customer pays AED 10,500 in advance with VAT included. VAT on the advance is 10,500 x 5 / 105 = AED 500, declared at once. Later you invoice AED 20,000 plus VAT 1,000 = AED 21,000 and apply the advance. Zeyto takes back the AED 500 already declared, so in total the VAT is 500 (advance) plus 500 (the rest of the invoice) = 1,000.
Before you correct
Rules of thumb
- Never delete a posted invoice: reverse it with a credit note or a cancel so the audit trail stays complete.
- Check the date first. Once a period is filed, Zeyto refuses VAT documents dated in it, so a correction goes in the open period.
- Keep the reason. A credit note should say why it was issued.
- A proforma invoice is not a tax invoice and declares no VAT. If a customer pays money against it, record that money as an advance.
- For a foreign-currency invoice, check the VAT amount in AED and the exchange rate used.
Credit notes and e-invoicing How credit notes are exchanged under the Ministry of Finance e-invoicing system depends on your Accredited Service Provider. For UAE e-invoicing, Zeyto's connection to a provider is not released yet, so we do not claim e-invoicing readiness. Rules change, so check the FTA website before you file. This page is general information, not tax or legal advice, and was last reviewed on 8 November 2026.
Go deeper
Related lessons
Practise corrections with exercises.
Related guides and pages
- UAE E-InvoicingUAE e-invoicing dates from the Ministry of Finance, what an accredited service provider does.
- UAE VAT FilingZeyto handles UAE 5% VAT end to end: tax invoices, input and output ledgers, reverse charge.
- e-Invoicing 2027What UAE e-invoicing means for your ERP: the Ministry of Finance dates, seven questions to ask any vendor.
- VAT 201 return guideHow to prepare a UAE VAT 201 return: what each box means, a worked example.
- UAE tax invoice requirementsWhat a valid UAE tax invoice must show: the 14-day rule, the fields on a standard invoice, simplified invoices.
- Reverse charge VATHow reverse charge VAT works in the UAE: services from foreign suppliers, import VAT.
Buying guides
- ERP Software UAEOffline-capable ERP for UAE businesses: sales, purchase, POS, inventory, accounting, UAE VAT and reports on your own server.
- Trading ERP UAEZeyto ERP for UAE trading companies: quotations, sales orders, purchase, GRN, landed cost, inventory, VAT, receivables.
- VAT POS DubaiZeyto POS for Dubai retail and service counters: VAT invoices, barcode billing, returns, refunds, day-end cash closing.
UAE e-invoicing roadmap
Get invoices, VAT and data fields in order first
Zeyto is built around UAE VAT, structured invoice data and local validation. The connection to an Accredited Service Provider is on the roadmap and not released yet.
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FAQ
Straight answers
How do I correct a wrong tax invoice in the UAE?
According to the FTA's guide, errors are corrected with a tax credit note or an additional tax invoice, not by editing the original.
Does a credit note reduce my VAT?
Yes. It reduces the supplier's output VAT and the buyer's input VAT.
When is VAT due on an advance payment?
In the treatment used by Zeyto, VAT is declared when the money is received, as 5/105 of the amount. The final invoice then takes back that slice so the supply is taxed once.
Can I cancel a return in a filed period?
No. Zeyto refuses to cancel or amend a return dated in a VAT period you have already filed and locked. Date the correction in an open period.
What is the difference between a void and a refund at the POS?
A void cancels a wrong receipt and reverses everything it posted, stock and VAT included, and works only on a receipt of the open shift. A refund keeps the sale and posts a credit note after it.
Post a credit note in the demo
Open the demo, start a Sales Return from an invoice and watch the VAT reverse.