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My customers order multiple products, and some of these products are VAT exempt.

The customer orders directly on our portal, and and a VAT invoice is created for all the products, including the ones that are not liable to VAT, as the system does not allow to exclude VAT exempt products to be excluded int the VAT calculations.

What are the liabilities to us ?

Do we need to pay VAT  to IRD on VAT charged on no VAT items ?

Your input is greatly appreciated.


1 Answer

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by (4.8k points)
First, you can not collect VAT on VAT-exempt products; if you collect in any case, you must remit collected VAT net of inputs to IRD if not it would amount to a fraud. Better you get your system updated. and have separate line items for liable and non-liable products otherwise it would be difficult to prove the VAT liability to IRD.