As part of Saudi Arabia’s ongoing digital transformation, understanding the correct invoicing procedures is now essential for every business. Whether you run a large corporation, a medical clinic, a small shop, or an online store, issuing tax and simplified e-invoices is mandatory under strict monitoring by the Zakat, Tax, and Customs Authority (ZATCA).
In this article, we simplify the required invoicing procedures for Saudi businesses, covering invoice types, registration steps, issuing processes, electronic integration, and dealing with suppliers and clients.
Difference Between Tax and Simplified E-Invoicing Procedures
Businesses in Saudi Arabia must issue two types of electronic invoices based on transaction nature:
- Tax Invoice: Used for business-to-business (B2B) or business-to-government (B2G) transactions.
Example: A construction company issuing a SAR 15,000 invoice to another company must include detailed buyer information, tax IDs for both parties, and a digital signature.
- Simplified Invoice: Used for business-to-consumer (B2C) sales or low-value transactions.
Example: Selling a SAR 300 product in a retail store requires a simplified invoice with essential details like QR code and seller information.
VAT Registration: The First Step in Invoicing Procedures
No business can begin issuing e-invoices without VAT registration and a valid tax ID. The registration process includes:
- Accessing ZATCA’s online portal.
- Creating an account and submitting a VAT registration request.
- Receiving the official tax ID, mandatory for both tax and simplified e-invoices.
Delays in registration may lead to fines of up to SAR 50,000!
Also read: VAT Registration in Saudi Arabia: A Complete Guide for Businesses
Practical Steps for Invoicing Procedures in Saudi Arabia
To issue compliant e-invoices, follow these invoicing procedures:
- Partner with an approved solution provider like EZ Integrated for seamless FATOORA integration.
- Prepare your accounting system to generate e-invoices in XML or PDF/A-3 formats.
- Ensure all required details are included: business information, tax ID, product or service details, QR code, and digital signature.
- Establish real-time electronic integration with the FATOORA platform via APIs.
- Send invoices instantly to ZATCA and receive immediate confirmation.
First and Second Phases of E-Invoicing Procedures
Understanding the two phases of invoicing procedures is vital for compliance:
- Phase One: Issuance and Archiving
Since December 2021, businesses must replace paper invoices with e-invoices and store them electronically for at least seven years.
- Phase Two: Integration and Compliance
This phase requires direct system integration with FATOORA, real-time invoice transmission, and adherence to technical standards such as QR codes and digital signatures. Implementation is gradual, based on business revenue and ZATCA’s group classification.
Staff Training and Managing Suppliers and Clients
Successful invoicing procedures depend on:
- Training your finance and admin teams on accurate data entry and e-invoice issuance.
- Educating suppliers and clients about the importance of compliant e-invoices.
- Verifying received invoices to prevent issues during tax filing.
Example: Receiving non-compliant invoices from a supplier can lead to rejection by ZATCA and complications in your tax reports.
Also read: Your Simplified Guide to Sending E-Invoices to Customers
Invoicing Penalty Exemption: A Valuable Opportunity
ZATCA has extended the e-invoicing penalty exemption initiative until December 2025. To benefit:
- Register for VAT within the exemption period.
- Submit all overdue tax returns accurately.
- Pay outstanding taxes or apply for installment plans during the grace period.
Seizing this opportunity allows businesses to correct errors and strengthen readiness for advanced integration stages.
Ready to Implement Invoicing Procedures? EZ Integrated is Your Trusted Partner
If you need expert guidance to navigate invoicing procedures, EZ Integrated offers:
- Complete solutions for issuing and integrating both tax and simplified e-invoices.
- Fast, secure connection to FATOORA using ZATCA-approved technology.
- Hands-on training for your team to master every step.
- Ongoing technical support to avoid disruptions and ensure full compliance.
Prepare your business today before it’s too late. Contact EZ Integrated experts for a free consultation and smooth transition to compliant e-invoicing with confidence.