Key takeaways
- Mandatory digital invoicing: Saudi Arabia’s ZATCA introduced e-invoicing in two phases (2021 and 2023) to modernize VAT compliance and improve transparency.
- Two e-invoice types: Standard e-invoices apply to B2B/B2G transactions, while simplified e-invoices are used for B2C sales, both requiring QR codes and Arabic formatting.
- Enhanced efficiency and control: E-invoicing reduces fraud, simplifies reporting, and promotes streamlined, accurate record-keeping for Saudi businesses.
In short: E-invoicing in Saudi Arabia is mandatory for VAT purposes. Saudi Arabia's Zakat, Tax, and Customs Authority (ZATCA) introduced it in two phases: Phase 1 began on December 4, 2021, and Phase 2 on January 1, 2023. Businesses issue standard e-invoices for B2B and B2G sales, and simplified e-invoices for B2C sales.
Saudi Arabia's Zakat, Tax, and Customs Authority (ZATCA) introduced e-invoicing in December 2021. The system was rolled out in two phases. It is designed to transform how businesses handle invoicing for value-added tax (VAT). You can also read Belgium Implements New E-Invoicing Law.
What are e-invoices?
E-invoices are invoices created electronically through specific e-invoicing solutions. These solutions let you create, access and store invoices in electronic formats. You can issue e-invoices through various platforms, including online cash registers, software installed on PCs, or cloud-based platforms. Read more in our guide: Hungary to Introduce E-Receipts and E-Cash Registers in 2024.
Note that a PDF or scanned copy of a paper invoice does not count as an e-invoice. Instead, an e-invoice must be produced directly through an e-invoicing system.
How do e-invoices work in Saudi Arabia?
Saudi Arabia has two types of e-invoices:
- Standard e-invoice: This type applies to business-to-business (B2B) and business-to-government (B2G) transactions. The seller creates the e-invoice and submits it to ZATCA for approval. Once it is approved, the seller sends the e-invoice to the buyer, who can access it with a QR code.
- Simplified e-invoice: This type is usually used for business-to-consumer (B2C) transactions. The seller creates the e-invoice and gives it directly to the buyer, who can access it with a QR code. The seller must also report the transaction to ZATCA within the set timeframe.
Saudi e-invoices must include certain information. This includes the date, the seller's details, the buyer's details, the VAT number, details of the goods or services sold, and the amount.
E-invoices must be issued in Arabic. However, you can add a second language to the e-invoice, such as English.
Once an e-invoice has been issued in Saudi Arabia, it cannot be changed. However, sellers can adjust quantities or prices by issuing a debit or credit note linked to the original e-invoice.
When was e-invoicing introduced in Saudi Arabia?
E-invoicing in Saudi Arabia is mandatory and was introduced in two stages, starting in December 2021. Phase 1 began on December 4, 2021. It required relevant taxpayers to issue and store e-invoices that meet ZATCA standards, without reporting them to the portal.
Phase 2 was introduced on January 1, 2023. It requires taxpayers to integrate their invoicing systems with ZATCA's Fatoora portal. Phase 2 is rolling out gradually based on annual taxable revenue. Taxpayers get 6 months' notice to integrate.
Which businesses must integrate with ZATCA in Phase 2?
ZATCA brings taxpayers into Phase 2 in waves, based on their VAT-able revenue. It notifies each targeted taxpayer directly. Recent waves have reached much smaller businesses:
- Wave 24: VAT-able revenue above SAR 375,000 in 2022, 2023 or 2024. Integration deadline: 30 June 2026.
- Wave 25: VAT-able revenue above SAR 187,500 in 2022, 2023, 2024 or 2025. Integration deadline: 1 February 2027, according to ZATCA's Wave 25 announcement.
What are the technical requirements for Phase 2 e-invoices?
In Phase 2, your invoicing solution must connect to ZATCA's Fatoora platform and produce invoices in a set electronic format. ZATCA's detailed e-invoicing guidelines set out these key rules:
- Format: Invoices must be in XML, or PDF/A-3 with embedded XML.
- Standard (B2B) invoices: ZATCA must clear each invoice before you share it with the buyer. ZATCA returns the cleared invoice with its cryptographic stamp and QR code.
- Simplified (B2C) invoices: Your solution stamps the invoice and adds the QR code. You must report each one to ZATCA within 24 hours of issuing it.
- Locked records: Your solution must not let users change or delete issued invoices, reset invoice counters or run multiple invoice sequences.
If you also sell into the neighbouring United Arab Emirates, see our UAE VAT guide for its registration and filing rules.
E-invoicing in Saudi Arabia marks a major change in how VAT compliance is managed. By making e-invoices mandatory, the Zakat, Tax, and Customs Authority (ZATCA) aims to make tax transactions more efficient and transparent while reducing fraud. As businesses adapt to the system, they are likely to benefit from smoother processes and better record-keeping. This can help them grow and succeed in the long run.
How Taxually handles this
Taxually’s e-invoicing API sends structured invoices to each country’s clearance platform, such as Italy’s SDI, Poland’s KSeF and Peppol networks, covering 32 countries from one integration. The VAT returns those invoices feed into are filed through CrossTax on the same platform.
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Frequently asked questions
What is e-invoicing in Saudi Arabia?
E-invoicing is the digital creation, storage, and exchange of VAT invoices using approved electronic systems, replacing traditional paper-based invoicing.
Who introduced e-invoicing and when?
The Zakat, Tax, and Customs Authority (ZATCA) introduced e-invoicing in December 2021 to improve VAT compliance and transparency.
What are the two types of e-invoices?
- Standard e-invoice: For B2B and B2G transactions, submitted to ZATCA for approval before being sent to the buyer.
- Simplified e-invoice: For B2C sales, issued directly to the customer and later reported to ZATCA.
Is e-invoicing mandatory?
Yes. E-invoicing became mandatory in two phases: Phase 1 (December 2021) required compliant e-invoice generation, and Phase 2 (January 2023) required integration with ZATCA’s Fatoora portal.
How quickly must simplified e-invoices be reported to ZATCA?
In Phase 2, you must report each simplified (B2C) e-invoice to ZATCA's Fatoora platform within 24 hours of issuing it. Standard (B2B) e-invoices must be cleared by ZATCA before you share them with the buyer.
Does a PDF invoice count as an e-invoice in Saudi Arabia?
No. A PDF or scanned paper invoice is not an e-invoice. It must be produced by an e-invoicing solution, and in Phase 2 it must be in XML or PDF/A-3 with embedded XML.
Can a Saudi e-invoice be changed after it is issued?
No. To correct quantities or prices, the seller issues a credit or debit note linked to the original e-invoice.
Must e-invoices in Saudi Arabia be in Arabic?
Yes. E-invoices must be issued in Arabic, but you can add a second language such as English.
