Frequently Asked Questions
E Invoicing - Fundamentals
All VAT-registered residents of Saudi Arabia, including persons who issue tax invoices on behalf of VAT-registered persons, have to generate and issues only Electronic Invoices.
However, non-resident taxable persons are kept outside the scope of the e-invoicing system.
There are two phases in electronic invoicing as detailed below:
Phase 1: Generation Phase – This phase applies from 4th December 2021 to all the VAT registered residents and other persons notified under the Regulations.
Generation of E Invoices, should be done through an e invoicing solution that is fully compliant and captures all the information specified by ZATCA, under the E Invoicing regulations
Phase 2: Integration Phase – This phase commenced from 1st January 2023 and involves specific tax payers and tax payer groups to integrate with the ZATCA’s system for clearance and reporting of e-invoices.
In addition to compliance requirements specified for phase 1, additional fields and information have been specified by ZATCA.
The tax payer will be notified by ZATCA about the system requirements and the integration date via API at least six months in advance.
For Example
If Al Ahmed Trading Co. Ltd., is required to start integrating effective July 1, 2024, then Al Ahmed Trading Co. Ltd, would receive a notification from ZATCA, regarding the same on or before January 1, 2024.
No specific Invoice format has been specified, the invoices should be issued and stored on the electronic e-invoice system per ZATCA’s requirements.
Export invoices are treated as standard tax invoices, and e-invoicing is mandatory for such invoices.
Under Value Added Tax (VAT) guidelines, such supplies are treated and classified as nominal supplies.
An e-Invoice must be generated for nominal supplies.
These supplies are treated as “Out of Scope” supplies from the standpoint of Value Added Tax (VAT) regulations.
However, if each line item of supply, exceeds the taxable value specified under VAT regulations, then, a Standard Tax Invoice has to be generated and applicable Value Added Tax (VAT) has to be charged there to, even if, it is supplied “Free of Cost.”
Please see the table below for the type of invoices to be issued by each business, based on the transaction type and instance.
Transaction Nature | Supplied to | Type of Invoice |
Supply of Goods and/or Services subject To VAT Charge | Domestic Customer with a Valid VAT ID (B2B & B2G supplies) | Standard Tax Invoice |
Supply of Goods and/or Services subject To VAT Charge | Domestic Customer with a Valid VAT ID, where taxable value is < SAR 1000 | Simplified Tax Invoice |
Supply of Goods and/or Services subject To VAT Charge | Domestic Customer, without a Valid VAT ID | Simplified Tax Invoice |
Supply of Goods and/or Services | Customer outside KSA | Standard Tax Invoice. (Separate Guidelines apply to Phase 2 Invoices, for Exports…. Click here to KNOW more) |
Supply of Goods and /or services “Free of Cost” (Viz Samples) - Nominal Supplies | Domestic Customer with a Valid VAT ID (B2B & B2G supplies) | Standard Tax Invoice (Separate Guidelines apply to Phase 2 Invoices, for Nominal Supplies…. Click here to KNOW more) |
Supply of Goods and/or Services | Customer within the same VAT Group | No Invoice need be issued. Supplies within the same VAT Group by one entity to another, is treated as “Out of Scope” |