Saudi E-Invoicing and VAT (ZATCA) 2026

The e-invoicing system launched by the Zakat, Tax and Customs Authority (ZATCA) is the most significant transformation in the Saudi tax system since the introduction of VAT in 2018. This guide covers the full system: scope, phases, invoices, and taxpayer obligations.

Zakat, Tax and Customs Authority (ZATCA)

The Authority was established in 2021 by merging three bodies: the Zakat and Income Authority, Customs, and the earlier zakat and income function. It handles:

• Management of Value Added Tax (15%) on goods and services
• Sharia Zakat on establishments owned by Saudis and GCC citizens
• Income tax on non-Saudi establishments operating in the Kingdom
• Excise Tax (like sweetened beverages and tobacco)
• Customs on imported goods
• E-invoicing

E-Invoicing — Phases

Phase 1: Issuance (4 December 2021)

What changed:

• End of hand-written invoices
• Establishments required to have a ZATCA-approved e-invoicing system
• Invoices contain a mandatory QR code
• Retained electronically for six years

Who is subject:

• Every VAT-registered establishment
• Includes physical stores, e-commerce, and professional services

Phase 2: Linking and Integration (1 January 2023)

What changed:

• Direct linking of invoicing systems with Fatoora (ZATCA's system)
• Every issued invoice is sent instantly to ZATCA for validation before delivery to the customer
• Applied to establishments in waves:
  • Group 1 (revenue > 3 billion SAR): January 2023
  • Group 2 (> 500 million): July 2023
  • Subsequent groups in stages until all establishments are covered
• Groups expand by establishment revenue

How the system works in Phase 2:

1. The establishment issues the invoice from its system
2. The system sends it to Fatoora via API
3. Fatoora validates and issues a confirmation code
4. The final invoice is printed or sent to the customer with the code

E-Invoice Requirements

Every invoice must contain:

| Item | Description | |---|---| | Seller's Tax Number | 15 digits | | Seller's trade name and address | As in the commercial registration | | Buyer's Tax Number | If an establishment (B2B) | | Sequential invoice number | Cannot be repeated | | Issuance date | Actual time of issuance | | Description of goods/services | Detailed, no abbreviations | | Pre-tax price | Per line | | Tax amount | 15% usually | | Total including tax | In Saudi Riyals | | QR Code | Mandatory (generated by a standardized formula) | | Confirmation Code | From Fatoora (Phase 2 only) |

Official Invoice Types

The system recognizes two main types:

1. Tax Invoice

For B2B transactions (between two VAT-registered establishments). Contains all data above.

2. Simplified Tax Invoice

For B2C transactions (establishment with consumer). Fewer data points, but the QR code is mandatory. Example: a store receipt.

Distinguishing rules:

• If the buyer is an establishment with a tax number, issue a full tax invoice
• If the buyer is an individual, the simplified invoice suffices

Common Violation Penalties

| Violation | Fine | |---|---| | Not issuing an e-invoice | 1,000–50,000 SAR by case | | Issuing a non-compliant invoice | 5,000 SAR per violation | | Deleting/modifying an invoice after issuance | 5,000–50,000 SAR | | Not retaining invoices for six years | 50,000 SAR | | Not registering for VAT despite eligibility | 10,000 SAR + due tax | | Not filing the return on time | 1,000–25,000 SAR |

Fines double on repetition. To appeal a fine, use the objection portal at zatca.gov.sa.

Filing a VAT Return

Filing Cycle

• Monthly: for establishments with annual revenue > 40 million SAR
• Quarterly: for others

Steps via ZATCA

1. Log in to the zatca.gov.sa portal with your establishment account
2. Go to VAT return
3. Fill in revenue, inputs, and collected tax
4. The system computes net tax due (tax on sales minus recoverable input tax)
5. Pay the tax via SADAD
6. Receive the filing certificate instantly

Additional Questions

When does VAT apply to GCC transactions? The GCC VAT Framework treats sales between registered GCC states as imports/exports. Details are set entity-by-entity.

Are digital services (SaaS) subject to VAT? Yes, digital services consumed in Saudi Arabia are subject to 15% even if the provider is foreign. Foreign companies register in VAT via "Non-Resident Registration".

What if I receive an invoice without a QR code? You may refuse to accept it as accounting evidence and ask the seller to issue a compliant invoice. Accepting it may cost you the right to recover input tax.

Are individuals subject to VAT? No. Individuals not conducting commercial activity are exempt. Even an individual who sells occasionally (like selling their personal car) is not considered a taxpayer.

Official Sources

• Zakat, Tax and Customs Authority, zatca.gov.sa
• Saudi VAT Regulation, Laws Portal
• Fatoora e-invoicing platform
• Approved invoicing systems list

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