Andersen

2021/09/13

A Credit note is a commercial document issued by the supplier or seller as a proof of the reduction of the sales value in case of any modification according to the information below.

A credit note is applicable in cases, including but not limited to:

1-Correcting an error, if the invoice amount is higher than what it should be,

 2- If the discount is not applied correctly.

3- If the goods are damaged or do not meet the specifications requested by the buyer and have been fully or partially returned to the supplier.

As for the debit note, the supplier can make any amendments related to a previously issued tax invoice for the supply of goods or services.

Why issue a Debit / Credit Note

If a taxpayer makes any adjustments or amendments to a supply,  must be reversed through a credit or debit note to correct the original tax invoice.

Therefore, any taxpayer must use the notes as per the following:

Credit Note Uses

The value of the taxable supply is adjusted after the supply tax invoice is issued and if the tax amount shown as tax charged on that invoice exceeds the true value of supply because:

a- The supply has been canceled or stopped after it has occurred completely or partially.

b- There is a fundamental change or modification in the nature of the supply that leads to a change in the tax due.

c – The value of that supply was agreed upon in advance, and then it was modified for any reason, including an additional discount offered after the sale was completed.

d- When returning goods or services or any part of them to the supplier if the supplier agrees to accept returns.

All suppliers (taxpayer) who made the supply must provide the customer with a credit note

Debit Note Uses

The value of the taxable supply is adjusted, when it is relating to the taxable entity, after an invoice is issued in respect of the supply and the amount shown as tax charged on that invoice is less than the actual supply value because:

a- The supply has been canceled or stopped after it has occurred or partially

b- There is a fundamental change or modification in the nature of the supply that leads to a change in the tax due

c- The value of the supply was agreed upon in advance, and then it was modified for any reason, including an additional discount offered after the sale was completed.

d- When returning goods or services or any part of to the supplier if the supplier agrees to accept returns

All suppliers (taxpayer) who made the supply must provide the customer with a debit note

Remember

The credit or debit note must include the date of issuance and a reference to the serial number of the tax invoice issued for the original supply, in addition to the executive regulations. There is no specific form for debit and credit notes, but the revised value of the original supply and the value-added tax associated with the modification must be indicated.