Understanding how to use a proforma invoice in Saudi Arabia is essential for smoother business transactions and avoiding disputes. In this guide, we explain when to issue one, what it should include, and how it differs from other invoices.
What Is a Proforma Invoice in Saudi Arabia?
A proforma invoice is a preliminary document issued by a seller to a buyer before the final sale. It outlines estimated details of the transaction, including products, prices, and conditions.
Unlike tax invoices, a proforma invoice does not request payment. It serves as a formal quotation or confirmation of intent before the actual deal is finalized.
When to Use a Proforma Invoice in Saudi Arabia?
Common scenarios for issuing a proforma invoice in Saudi Arabia include:
- Sending price quotes to potential buyers.
- Starting price or quantity negotiations.
- Handling export or import documentation.
- Confirming advance or partial payments.
Why a Proforma Invoice in Saudi Arabia Matters
Using a proforma invoice in Saudi Arabia offers several benefits:
- Sets clear terms before commitments.
- Reduces misunderstandings and disputes.
- Enhances trust and transparency with clients.
- This document serves as a vital step in streamlining communication and ensuring both sides are aligned.
Required Fields in a Proforma Invoice in Saudi Arabia
To ensure clarity and professionalism, every proforma invoice in Saudi Arabia should include:
- A clear title labeled “Proforma Invoice”.
- Seller and buyer details (names, addresses, contact info, tax IDs).
- Item descriptions with estimated prices and quantities.
- Total estimated value of the invoice.
- Payment, shipping, and validity terms.
- Issue date and invoice expiration.
Proforma vs. Electronic Tax Invoice
It’s important to distinguish a proforma invoice in Saudi Arabia from a formal electronic tax invoice.
A proforma invoice is not legally binding and does not include VAT. It does not get submitted to ZATCA’s “Fatoora” portal.
An electronic invoice, however, is official, includes VAT, and must follow ZATCA’s e-invoicing regulations.
Also read: Your Guide to Full Integration with “Fatoora” Portal
Is the Proforma Invoice Subject to E-Invoicing Laws?
No. A proforma invoice in Saudi Arabia is not a tax invoice and does not require VAT. It’s not part of mandatory e-invoicing phases, but it should clearly state that it’s VAT-exempt and non-binding.
Common Mistakes to Avoid
Here are mistakes to avoid when issuing a proforma invoice in Saudi Arabia:
- Not labeling the document properly.
- Confusing it with a tax invoice.
- Including incomplete or inaccurate information.
- These errors can cause legal or financial complications.
Best Practices for Issuing a Proforma Invoice
To ensure compliance and professionalism, follow these tips:
- Use a consistent, branded invoice template.
- Include a clear validity date.
- Double-check all invoice data before sending.
- Exclude VAT and note that it is a preliminary document.
Also read: Everything You Must Know About Value Added Tax in Saudi Arabia
How EZ Integrated Can Help
EZ Integrated helps businesses manage both proforma and electronic invoices with ease. Our solutions are aligned with Saudi regulations and tailored for local and foreign entities alike.
Our services include:
- Seamless integration with the Fatoora portal.
- Expert consulting on invoice types and formats.
- 24/7 support and technical assistance.
- Guidance for proforma invoice in Saudi Arabia best practices.
Need help managing your invoicing workflow? Contact EZ Integrated today for a free consultation and stay fully compliant in every invoice you issue.