---
title: "Input and output VAT"
description: "Input and output VAT meaning: output VAT is charged on sales, input VAT is paid on purchases. Learn how they net off on a VAT return, with a worked example."
url: https://1flux.ai/glossary/input-and-output-vat
last_updated: 2026-10-10
---

[Accounting](https://1flux.ai/glossary#accounting)

# Input and output VAT

Input and output VAT meaning: the two sides of every VAT return, and how they net off.

Glossary Updated 10 October 2026

Definition

Output VAT is the VAT a business charges on its sales, and input VAT is the VAT it pays on its purchases; the difference is what it pays to, or reclaims from, the tax authority.

## Input and output VAT meaning on a VAT return

Keeping them in separate ledger accounts makes the VAT return straightforward: output VAT for the period, minus recoverable input VAT, equals VAT payable. Input VAT can usually be recovered only with a valid [tax invoice](https://1flux.ai/glossary/tax-invoice) and for purchases used in taxable business, and some categories are blocked under local rules.

One quarter for a distributor

Example

- Output VAT charged on sales

  SAR 90,000

- Input VAT paid on stock and services

  SAR 62,000

VAT payable to the tax authority

SAR 28,000

If input VAT is higher than output VAT, the business can claim a refund or carry the credit forward. See [VAT](https://1flux.ai/glossary/vat) for how the tax works overall.

In 1flux

Sales invoices post output VAT and purchase invoices post input VAT, each to its own mapped account, and the Accounting overview compares output and input VAT for the current quarter. 1flux prepares VAT returns for the UAE and Saudi Arabia from the input and output VAT already posted. [See automated posting](https://1flux.ai/products/accounting/automated-posting)

Related

## Keep exploring

### [VAT](https://1flux.ai/glossary/vat)

A tax charged on sales and reclaimed on purchases.

### [Tax invoice](https://1flux.ai/glossary/tax-invoice)

The invoice a VAT-registered supplier issues for a taxable sale.

### [Purchase invoice](https://1flux.ai/glossary/purchase-invoice)

A supplier's bill as recorded in your books.

### [Automated posting](https://1flux.ai/products/accounting/automated-posting)

Receipts, deliveries, invoices and payments post balanced journals through one gateway.

Last updated 10 October 2026