Avoiding VAT return mistakes and checklist review



Wafeq automatically generates the VAT return based on your day-to-day recorded transactions. However, in some cases, the report might appear incomplete or even empty, usually due to incorrect tax application during transaction entry or errors in how the return was generated.

To make things easier, Wafeq includes a built-in review checklist within the VAT return. This tool highlights any issues preventing the report from being complete, helping you identify and fix common mistakes before submission.

In this guide, we’ll walk through the most common errors that affect the accuracy of your VAT return, show you how to prevent or correct them, and explain how to use the review checklist to ensure a smooth and accurate filing.

Issue 1: No Tax Rate applied to the transaction

One of the most common mistakes is recording a VAT-applicable transaction without selecting a tax rate. This can happen in invoices, credit notes, debit notes, expenses, and other entries.



How to avoid this error

When creating a transaction:

• In the invoice, expense, or note entry screen, always ensure that a VAT rate is selected for each line item.
• To save time, assign default tax rates to your products or services so the system applies them automatically when selected.

How to fix it after it happens

• Go to Reports from the main menu.
• Open the VAT Report

Wafeq will highlight transactions with missing tax rates under the review checklist. Click the listed item to open and update the original transaction.



After opening the report, click the Review Checklist button at the top of the page.

This will display any missing or incorrect entries that could affect your VAT return, including transactions with no tax rate applied.



A pop-up window will appear showing alerts for transactions where no tax rate was applied.

Click View next to the relevant alert, and Wafeq will display a list of transactions that need correction.



You’ll be automatically redirected to the filtered list of transactions where VAT was not applied.

From this view, you can either edit the tax rate directly in the table or open each transaction individually to update the VAT rate from within the entry screen.



Issue 2: VAT was posted directly to the VAT account instead of using a Tax Rate

In certain transactions, like manual journal entries or purchase invoices, you might manually add the VAT amount to an account such as “VAT Payable”, instead of applying a tax rate through the designated tax field at the line item level.

While this entry will show up in account reports, Wafeq does not recognize it as a valid VAT amount for the return. Therefore, it will be excluded from your VAT filing.



How to detect this error manually?

Go to Reports from the main menu, then select General Ledger.



Filter by the relevant tax account (e.g., “VAT Payable”) by clicking Filter, selecting the account, then clicking Apply.



Review the listed transactions and look for manual journal entries or invoices where the VAT amount appears as a direct value, without a tax rate applied. Then click on the source of each transaction.

• Delete the line that manually posts the VAT amount to the tax account.
• For each item, go to the Tax Rate field and select the appropriate rate (e.g., 15%).
• Save the transaction after making the changes.



Issue 3: Using Custom Tax Rates instead of System Defaults

A common mistake that leads to missing transactions in the VAT return is using a manually created tax rate, even if it’s the same percentage as an official one.

When you create a new organization, Wafeq automatically adds the default tax rates approved in your country (e.g., 15% Standard VAT in Saudi Arabia, 0% for exports, etc.).

If you manually create a new tax rate with the same percentage, Wafeq won’t include it in the VAT return — because it’s not recognized as a system-approved rate.

You can view your tax rates by going to Taxes from the For Accountant section under the main menu. System tax rates are marked with the Wafeq logo, while custom tax types are not.



How to avoid this error

When adding VAT to any transaction, always select a tax rate that displays the Wafeq logo.

This indicates that it's a system-recognized rate that will be correctly included in your VAT return.



How to fix it after it happens?

If you’ve recorded transactions using a custom tax rate and they don’t appear in your VAT return, here’s how to fix them:



• Open the transaction (such as an invoice or expense).
• For each line item, change the tax rate to one of the default Wafeq-provided rates. Save the changes.
• Re-export the VAT Report, and the transaction will now be included correctly.

Issue 4: Incorrect date range in the report

Sometimes, the VAT report appears empty or missing data simply because the selected date range doesn’t include any recorded transactions.

How to check and correct it

In Wafeq:

• Go to Reports from the main menu.
• Open the VAT Report.
• At the top of the page, double-check the Start Date and End Date. Make sure they match the actual period when transactions were recorded.