Output tax and input tax

Value added tax charged on sales is output tax, owed to the tax authority; tax paid on purchases is input tax, which can usually be deducted. Two accounts, not one.

Tax payable = Output tax (on sales) − Input tax (on purchases)

Why it matters

A business collects tax for the authority on its sales and recovers the tax it paid on its purchases. Netting them in one account hides what is owed and what is recoverable.

Where it appears in a CFO+ model

In the taxes section, which every model asks.
Rates and rules are those of the jurisdiction chosen for the model, not fixed here.

Learn the concept in the Academy

Open the lesson (the lesson is currently available in Arabic only)

Activities where it shows up

This concept belongs to a section that every CFO+ model asks, whatever the activity.

No figures are published: a definition and a formula only.