VAT and e-invoicing in Saudi Arabia (2026): ZATCA guide

VAT in Saudi Arabia (ضريبة القيمة المضافة) is administered by the Zakat, Tax and Customs Authority (ZATCA, هيئة الزكاة والضريبة والجمارك). It started at 5% on 1 January 2018 and has been 15% since 1 July 2020. E-invoicing is already compulsory: every VAT payer issues electronic invoices, and ZATCA's Fatoora integration phase now reaches businesses with revenue above SAR 187,500. This guide covers rates, registration, returns, invoice contents, the Fatoora phases and a worked example in riyals. Rules are as of October 2026.

VAT in Saudi Arabia at a glance

The rules are in the VAT Law, its Implementing Regulations and the GCC Unified VAT Agreement. Amounts in a foreign currency are converted to riyals at the Saudi Central Bank's daily rate on the date the VAT becomes due.

Who must register for VAT

• Mandatory registration: a resident business must register when the value of its supplies in the last 12 months exceeds SAR 375,000, or is expected to exceed it in the next 12 months. You check at the end of each month and apply within 30 days of the end of the month in which you crossed the line.
• Voluntary registration: possible from SAR 187,500 of supplies or expenses.
• Non-residents that must pay VAT in the Kingdom register whatever their turnover.
• Once registered you receive a VAT registration number, which you show on your tax invoices and in your correspondence with ZATCA.

Late registration carries a fixed fine of SAR 10,000.

VAT returns and payment

For a quarterly filer, the return and the payment for January to March are due by 30 April. Penalties are steep: 5% of the unpaid VAT for each month or part of a month of delay, and 5% to 25% of the tax due for not filing a return.

Tax invoices and simplified tax invoices

Article 53 of the Implementing Regulations sets two kinds of invoice. Both must be in Arabic, with any other language as a translation.

Tax invoice (B2B)

Issued for supplies to other businesses, to exports and intra-GCC supplies, and for advance payments from business customers, no later than the 15th of the month after the supply. It shows:

1. 1The date of issue
2. 2A sequential number that uniquely identifies the invoice
3. 3Your VAT registration number
4. 4The customer's VAT number and a statement that the customer must account for the VAT, where the reverse charge applies
5. 5The name and address of the supplier and of the customer
6. 6The quantity and nature of the goods, or the scope and nature of the services
7. 7The date of supply, if different from the date of issue
8. 8The taxable amount per rate or exemption, the unit price without VAT, and any discounts not already in the unit prices
9. 9The VAT rate applied
10. 10The VAT amount, in riyals
11. 11If VAT is not charged at the standard rate, an explanation of the treatment
12. 12A reference to the profit-margin scheme, where it applies to used goods

A summary tax invoice can cover several supplies to the same customer within one calendar month, issued by the 15th of the following month.

Simplified tax invoice (B2C)

Issued for supplies to consumers, on the date of the supply or of the payment, whichever is earlier. It shows the date, your name, address and VAT number, a description of the goods or services, the amount payable, and the VAT or a statement that the price includes VAT. When the total is below SAR 1,000, the supplier's VAT registration number is not required.

Corrections and records

• Credit and debit notes: when the value of a supply changes after the invoice, issue a credit note (the VAT charged was too high) or a debit note (too low). They carry the details of the corresponding invoice and refer to its sequential number. You can also use them to correct errors in the invoice details.
• Records: keep invoices, books, records and accounting documents for at least six years from the end of the tax period, longer for capital assets, in Arabic. Failing to keep them can cost up to SAR 50,000.

E-invoicing: ZATCA Fatoora phases

ZATCA's e-invoicing applies to all VAT-registered taxpayers resident in the Kingdom, and to anyone issuing tax invoices on their behalf. A scanned paper invoice is not an e-invoice.

Phase 1: generation (since 4 December 2021)

Invoices, credit notes and debit notes must be generated and stored by a compliant electronic solution with the required fields. Simplified tax invoices carry a QR code.

Phase 2: integration (since 1 January 2023, in waves)

Your e-invoicing solution connects to ZATCA's Fatoora platform:

• Tax invoices (B2B) are sent to ZATCA and cleared before they are shared with the customer.
• Simplified tax invoices (B2C) can go to the customer immediately but must be reported to ZATCA within 24 hours.
• The format is a structured XML file with the fields ZATCA prescribes.

ZATCA selects each wave by revenue subject to VAT and notifies each taxpayer at least six months before its integration date. The first wave in 2023 covered businesses with revenue above SAR 3 billion; the thresholds have come down wave by wave since. The latest announced wave reaches small businesses:

If you received a notification, the date in it is the one that counts. For Phase 2 you need an e-invoicing solution that is integrated with Fatoora. Clientlly is not a ZATCA-integrated e-invoicing solution, so the clearance and reporting of your invoices must go through one that is.

Worked example in riyals

A small trading company files its quarterly return for January to March 2026:

• Sales: SAR 200,000 before VAT. Output VAT at 15%: 200,000 × 0.15 = SAR 30,000. Customers pay SAR 230,000.
• Purchases: goods and services for SAR 80,000 plus SAR 12,000 VAT, backed by valid tax invoices.
• VAT due: 30,000 − 12,000 = SAR 18,000, filed and paid by 30 April 2026.

To find the VAT inside a price: SAR 1,150 × 15 ÷ 115 = SAR 150.

Common mistakes

1. 1Missing your Phase 2 date. Check the ZATCA notification and test the integration well before the deadline.
2. 2Issuing a simplified invoice to a business customer. A business needs a full tax invoice, cleared through Fatoora once you are in Phase 2.
3. 3Invoices without Arabic. The required details must be in Arabic, with any other language as a translation.
4. 4Paying late. At 5% a month, a few months of delay quickly adds up.
5. 5Late registration after passing SAR 375,000, which costs SAR 10,000 on top of the VAT.
6. 6Correcting an invoice by cancelling it instead of issuing a credit or debit note that refers to it.

How Clientlly helps

Clientlly numbers your invoices sequentially in each series, applies Saudi Arabia's VAT rate on every invoice and links credit notes to the original invoice. It keeps sales and purchase VAT books per rate, including exports and reverse charge, reads the VAT from scanned purchase receipts, and prepares tax reports for you and your accountant with Excel and PDF exports. You can invoice in multiple currencies, send the PDF in your client's language with a card payment link, and let automatic reminders go out 3, 14 and 30 days after the due date. See the accounting module and all features.

Clientlly is not connected to ZATCA's Fatoora platform and is not certified for Saudi e-invoicing: the legally valid e-invoices themselves must be generated, cleared and reported by a ZATCA-compliant solution.