How to Record Customs Fees and VAT for Imported Goods

When importing goods into Saudi Arabia, Value-Added Tax (VAT) is not charged on the invoice issued by the foreign supplier. Instead, the VAT is collected by the Zakat, Tax and Customs Authority (ZATCA) when the goods enter the Kingdom.

For this reason, you need to manually record the VAT in the system so that it appears correctly in your VAT return and is counted as part of your input tax.

In this tutorial, we’ll walk through a complete, practical scenario that demonstrates how to record this type of transaction step by step ensuring compliance with the requirements of the Saudi Customs regulations.

Step 1: Record the invoice issued by the foreign supplier

Since the supplier is located outside Saudi Arabia, VAT is not applied to the invoice. However, you still need to record the full invoice amount converted to Saudi Riyals.

To do this, click on "Purchases" from the main menu, then click on "Bills", and finally click the "Record bill manually" button.

Start by recording the supplier bill received from abroad.
Make sure to convert the bill amount into Saudi Riyals, and enter the SAR value based on the exchange rate used for the supplier’s foreign currency.

Note: No VAT should be recorded on this bill.

Step 2: Record the VAT paid to Customs

Since VAT is collected directly by the (ZATCA) when goods enter the country, you need to reflect this amount in the system so that it appears in your VAT return.

If you've already recorded the foreign supplier’s invoice, you do not need to re-enter the goods value when recording the import VAT. However, you still need to record the VAT amount accurately so that it is properly reflected in your VAT return.

To do that, follow these steps using a new bill Invoice:

1. Add a new line item representing the value of the goods for VAT purposes (e.g., SAR 1,000).

   • Use an interim account such as "Clearing Account" or "Customs Settlement" in the Account field.

   • In the Tax field, select “VAT at Customs 15%”.

2. Add a second line item with the same amount but negative (e.g., -1,000 SAR).

   • Use the same account as in the first line.

   • Do not apply any tax on this line.

This transaction will not affect your expenses or inventory.
However, the import VAT will be automatically recorded and will appear in the VAT return under the appropriate tax field.

Step 3: Recording customs fees (if applicable)

In some cases, your company may be charged actual customs fees either by the customs broker or directly by the (ZATCA).
These fees are not considered part of the goods value, but should be recorded as a separate expense in the system.

To record customs fees in Wafeq:

1. Go to the "Bills" page and click "Record bill manually" to create a new bill.

2. Add a new line representing the fee, and select an appropriate account such as "Customs Charges".

3. In the Tax field, choose the applicable VAT rate as per the customs declaration.

If the fees are not subject to VAT, select "Non-VAT".

Note: These fees are not a replacement for import VAT.
They are recorded as operating expenses and appear in your income statement accordingly.

Step 4: Verify that the import VAT appears in the VAT return

Click on "Reports" from the main menu, then click on "VAT".

Select the time period during which the bills were recorded.

Look for the section labeled "VAT on purchases" and confirm that the VAT amount appears there.