Key Differences Between Tax and Simplified Tax Invoices

Transitioning from traditional invoicing to e invoicing is a significant step towards full digital transformation in Saudi Arabia, contributing to a sustainable economy. However, many businesses still face challenges in understanding the difference between a tax invoices and a simplified tax invoices.

This article explains the key differences between the two types of invoices, focusing on who issues them, the recipients, their elements, and how they work. Additionally, we’ll guide you on how to comply with e-invoicing requirements in the second phase using the best e invoice solutions from EZ Integrated.

What is the Difference Between a Tax Invoice and a Simplified Tax Invoice?

The e invoicing system in Saudi Arabia includes two types of invoices: tax invoices and simplified tax invoices. They can be defined as follows:

Tax Invoice

A tax invoice is an electronic invoice used in transactions between businesses (B2B) or between a business and a government entity (B2G).

It covers the supply of goods or services subject to VAT or the export of goods and services from Saudi Arabia.

Simplified Tax Invoice

A simplified tax invoice is another form of electronic invoice issued by a business to an individual (B2C).

It applies to the supply of goods or services valued below SAR 1,000, or in cases where a registered VAT trader sells to a consumer.

How Do Tax and Simplified Invoices Work?

In addition to the difference in the entities issuing and receiving the invoices, the tax invoice and simplified tax invoice also differ in their workflow in the second phase of e invoicing:

Steps for Issuing a Tax Invoice:

The seller issues the invoice with all required elements.
The invoice is shared with ZATCA via the FATOORA platform in XML format.
The invoice is shared with the buyer in XML or PDF/A-3 format.
The invoice is stored electronically.

Steps for Issuing a Simplified Tax Invoice:

The seller issues the simplified tax invoice with all required elements.
A printed or electronic copy is delivered to the buyer.
The invoice is stored electronically.
The invoice is shared with ZATCA via the FATOORA platform in XML format within 24 hours of issuance.

It’s important to note that making any changes to an invoice between delivery to the buyer and submission to ZATCA can result in fines of up to SAR 10,000.

Difference in Invoice Elements

Invoices of both types must be issued using a compatible system that adheres to ZATCA’s e invoicing requirements. Here’s how their elements differ:

Tax Invoice Elements:

Invoice title labeled as “Tax Invoice”
Invoice serial number
Date and time of issue in YYYY-MM-DD format
QR Code
Seller and buyer information, including VAT registration and commercial registration numbers
Product name, price, and quantity, or service description
Total amount excluding VAT
VAT rate and amount
Total amount including VAT
Total excluding VAT
VAT in SAR
Total including VAT

Simplified Tax Invoice Elements:

Invoice title labeled as “Simplified Tax Invoice”
Invoice number
Date and time of issue in YYYY-MM-DD format
Store name and address
VAT registration number
Invoice items (quantity, unit price, and VAT for each item)
Total VAT field
Total amount including VAT
QR Code

Be Ready for the Integration Phase with EZ Integrated’s E Invoice Solutions

If you run a business in Saudi Arabia, it’s essential to understand the difference between a tax invoice and a simplified tax invoice to use an e invoice solution that suits your business. You also need to ensure that your system is integrated with ZATCA’s FATOORA platform.

EZ Integrated provides the best e invoice solutions that ensure full tax compliance and secure integration with ZATCA. Our solutions are easy to implement and will seamlessly integrate your system with FATOORA.

Contact us today for a free consultation and find out how our solutions can ensure safe and smooth integration with ZATCA’s platform.