6 Days a Week
Free On Premise
Accounts & VAT
Saudi Arabia is one of the first countries in the Gulf Cooperation Council (GCC) that has advanced considerably in the process of digitalization of its tax system through the use of E-invoices in Saudi Arabia, referred to as Fatoorah. Implemented under the VAT legislation by the Zakat, Tax, and Customs Authority (ZATCA), e-invoicing in Riyadh improves the overall clarity, conformity, and effectiveness of tax operations. The process started with phase one from the 4th of December, 2021, and moved to phase two starting from the 1st of January, 2023, meaning that businesses had to ensure that they are fully interconnected with the ZATCA systems. This phased approach shows the intention of Saudi Arabia towards a digitalized and compliant economy.
E-invoicing in Saudi Arabia comprises of standard and simplified e-invoices depending on the type of transaction, B2B, B2C, and export. Each type complies with the specific legal requirements of the VAT, which makes the reporting more accurate. The system also supports electronic credit and debit notes, summary e-invoice, self-billing invoice, third party billing invoice to suit the various business needs without compromising on the VAT laws.
ZATCA’s e-invoicing framework is still being implemented by Saudi businesses, and additional updates help clarify and make the process smoother. Subsequent releases provide specific timelines for integration in relation to businesses’ turnover levels to highlight the importance of compliance. This digital transformation not only helps the company to improve the tax management, but also support the Kingdom of Saudi Arabia Vision 2030 to build a modern and transparent economy.
New Information on E-Invoice in KSA
The latest updates are from November 2024, and any business which is registered under KSA VAT and they recorded turnovers of more than SAR 2 million in either 2022 or 2023 must connect their ERP/POS systems to the Fatoorah portal by the 31st August 2025. Subsequent waves will be charged to those with higher turnovers, for example, SAR 2.5 million by 31/07/2025 and SAR 3 million by 01/04/2025. Watch these for compliance deadlines.
1. Standard E-Invoice
A standard e-Invoices in Saudi Arabia is obligatory in Business to Business (B2B) and Business to Government (B2G) supply chains. This is required for purposes of claiming input VAT deductions as provided by Article 53 (5) of the VAT Implementing Regulations. These invoices have to be in a certain format and have to be stamped electronically through the Fatoorah portal. Some of the important fields are; name of the seller and buyer, transaction information, and goods or services transacted.
Format of e-Invoices in Saudi Arabia: An e-invoice will consist of standard data, which describes the transaction, and its format will meet the requirements of the VAT legislation. It has to be signed and approved by the Fatoorah portal to be considered valid for VAT purposes.
2. Simplified E-Invoice
The e-Invoices in Saudi Arabia are for Business to Consumer (B2C) transactions where the deduction of input VAT is not allowed. These invoices are relatively easy and require customers to be given at the time of purchase of a product with a hard copy retained for future use. In Phase 2, the simplified e-Invoices in Saudi Arabia must be submitted to the ZATCA portal not later than twenty-four hours after the invoice is created.
Format of Simplified e-Invoice: These invoices contain fewer textual elements than regular invoices and are mostly used to describe the most important aspects of a transaction. They are ideal for small value transactions where issues to do with VAT deductions are not so pertinent.
3. Credit and Debit Notes
In the case of subsequent changes to a transaction for which an e-invoice has already been issued, electronic credit and debit notes are obligatory. These notes have to link to the original invoice and the structure of such notes depends on whether the original invoice was standard or simplified.
4. Summary E-Invoice
The summary invoices are applied where there are several supplies of goods or services to a customer in a given period, such as monthly supplies. A summary invoice combines all the supplies and is used for tax purposes only. There are no further format requirements other than all taxable supplies must be included in the summary.
5. Self-Billing E-Invoice
However, under some circumstances, the buyer can generate tax invoices in his/her own behalf through the self-billing system. But this must be done in consultation with the tax authority and the buyer has to adhere to some rules. These invoices must bear an electronic marker that they are self-billed even though the actual marker may not be seen in the human readable copy.
6. Third-Party Billing E-Invoice
Third party billing involves where the supplier hires another company, for instance an accounting company to issue bills for the supplier. Like with self-billing, these invoices must have an electronic marker to show that the third party has issued the invoice but the marker will not appear on the invoice.
ZATCA’s guidelines define which type of e-invoice has to be sent according to the type of supply and the details of the buyer. For example:
Invoice Types Based on Supply:
Conclusion
As Saudi Arabia stays ahead of other countries in the GCC with its e-invoicing legislation, companies must adhere to ZATCA’s rules. It is crucial to know the various kinds of and forms of e-invoices in Saudi Arabia to manage VAT reporting and stay in compliance with the phased implementation. To avoid penalties, make sure to connect your systems with the Fatoorah portal and use the right format of invoices. Saudi Arabia businesses need to ensure they remain abreast with the e-invoicing rules and the due dates so that they do not fall foul of the VAT law.
