Updated on: Jan 29th, 2024
10 min read
Value Added Tax (VAT) invoicing rules in the Kingdom of Saudi Arabia (KSA) mandatorily require a taxable person to issue a tax invoice, simplified tax invoice or summary tax invoice as the case may be. This article will explain everything about VAT invoicing in KSA, including tax invoices in special circumstances and other documents used under VAT in Saudi Arabia. So, let’s deep dive into the VAT invoicing KSA rules.
The Unified VAT Agreement requires every taxpayer to issue a tax invoice that will contain details of supply, VAT charged and details of the taxpayer and the recipient of goods or services.
A taxpayer must issue a tax invoice in the following cases:
As per the VAT invoicing in KSA, non-registered persons cannot issue a tax invoice or collect any VAT from the customers.
VAT invoicing rules consider it a violation of the act. The person issuing a tax invoice or a similar document that can be regarded as a tax invoice or collects VAT from customers will be liable to a fine up to SAR 100,000.
Taxpayers can issue the tax invoice either physically or electronically. However, both such tax invoices must include necessary basic details as required by VAT invoicing KSA.
A sample tax invoice is provided below:
The taxpayer must issue a tax invoice physically or electronically to its customer within 15 days after the month in which the supply was made.
For example, if a supplier sold goods in May, the tax invoice must be issued before the 15th of June.
It is important to remember that the taxpayer can only issue a tax invoice once. If he is required to issue again, then he must mention on the tax invoice clearly that this is a ‘copy of the original tax invoice.’
The actual date of supply means the date of delivery of the goods or the performance of the services.
However, in a few cases, the date the supply takes place may be earlier than the actual date of supply.
A simplified tax invoice contains fewer details than the tax invoice where the supplier can only mention the transaction, and he does not need to mention the customer details.
A taxpayer can issue a simplified tax invoice in the following cases:
However, in the following cases, the taxpayer cannot issue a simplified tax invoice. He will have to issue a tax invoice.
The guideline issued by Zakat, Tax and Customs Authority (ZATCA) provides minimum details that must be included in the simplified tax invoice are:
A sample of simplified tax invoice is provided below:
Suppose a supplier supplies goods or services periodically to his customers. In that case, he can issue a single tax invoice that will contain all supplies of goods and services of the month falling in the same tax period.
In other words, a taxpayer can issue a summary tax invoice if he makes more than one taxable supply to a single customer for a month that is included in the same tax period.
The content requirements and other rules applicable to a tax invoice are also applicable to the summary tax invoices. The taxpayer may not be required to issue separate tax invoices for each supply mentioned in the summary tax invoice.
The Unified VAT Agreement and the Implementing Regulations in KSA set out requirements to issue tax invoices in special circumstances. Let’s understand which are those:
In the case of a self-billed tax invoice, the customer issues the tax invoice for the supplies made to him by the supplier. The authority may approve the application by the customer to allow him to issue a self-billed tax invoice if the following conditions are met:
If the following conditions are met, a third party is allowed to issue a tax invoice under VAT invoicing Saudi Arabia guidelines:
The self-accounting of VAT is required if the following conditions are met:
Hence, if a non-resident supplies goods or services in KSA to a resident in KSA, the recipient of such goods or services will have to self-account for VAT under the reverse charge mechanism.
In such cases, the customer is not required to issue a tax invoice to itself. But, if the non-resident supplier is registered under VAT in Saudi Arabia, then he must issue a tax invoice to the customer and mention on the tax invoice the words ‘customer must account for the VAT.’
The VAT invoicing rules for the profit margin scheme is analysed considering two situations:
Electronic invoicing is mandatory under KSA VAT from 4th December 2021 for all taxpayers. The e-invoices must be issued through the compliant solutions. The taxpayers are responsible for ensuring the authenticity of the origin of the e-invoice, integrity of the content, and the legibility of the e-invoice.
A credit or debit note is issued if adjustments are made in the already issued tax invoice. Hence, a supplier will issue a credit note or a debit note if one of the following circumstances occur:
The below are commonly asked questions about the issue of tax invoices:
Yes, the e-invoices must be generated online and should have internet connectivity.
Yes, the tax invoice must mention the amount of VAT charged on the taxable supplies.
No, the VAT is charged on the actual value of the taxable supply and hence, any discounts or deductions must be deducted before charging the VAT.
Yes, all the tax invoices issued by the member of a tax group must mention their group tax number.
Yes, the authority may accept the copy of the original invoice if sufficient evidence exists that it is a true copy of the original.