Tax category code not accepted

What does this mean?

The list is closed at four codes: S standard rate 15%, Z zero-rated, E exempt, and O outside the scope of VAT.

The code is not the rate: the category is a letter and the rate is a number, and each has its own field. Writing 15 where S belongs fails here.

The European specification knows other codes, such as AE for reverse charge — those are not adopted in the Saudi version, which is why imported systems fail here so often.

Why does it happen?

Ordered from the most common to the least — your cause is most likely the first or the second.

• An integration that passes the tax rate, or a name such as zero or exempt, in the category field instead of the adopted letter.
• The right letter in the wrong case: a lower-case s is not S.
• A system built on the European specification sending AE or other codes outside the four.
• Confusing zero-rated with exempt during setup, then fixing it by writing an invented value.

How to fix it

2 steps, then send the invoice again.

1. 1
   Correct the code to the adopted letter

   Look at what the line really is: a taxable local sale gives S; exports, medicines and other zero-rated goods give Z; financial services, life insurance and the like give E; and anything outside the scope of VAT gives O. Then resend the same invoice.

2. 2
   Separate the category from the rate in the integration

   Have the integration pass the letter in the category field (BT-151) and the rate in its own field, and never derive one from the other by guessing. Zero-rated and exempt are both 0%, but their categories differ and so does their VAT treatment.

Once corrected, send the invoice again. A rejected invoice was never recorded with the Authority, so it needs no credit note — send the corrected invoice itself.

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