Simplified or standard tax invoice: which one should you issue?

What is the difference between the two invoices?

A standard tax invoice is the full document a business gives another business: it names both parties, lists every line with its VAT and lets a registered buyer deduct the VAT. A simplified tax invoice is the shorter document of everyday retail: it names the seller, the goods and the amount, and it carries a QR code.

Both are tax invoices. ZATCA's guideline is clear that a taxable person must issue a tax invoice for every taxable supply, whether it is the standard kind or the simplified kind, whatever the habits of the trade. A till receipt in Saudi Arabia is therefore a simplified tax invoice, not a separate kind of paper.

When can you issue a simplified tax invoice?

The VAT rules allow a simplified tax invoice in two cases: when the value of the supply is less than SAR 1,000, and for every supply to a natural person who is not subject to VAT, whatever the amount. So a consumer buying a SAR 5,000 sofa can receive a simplified invoice, while a company buying SAR 5,000 of office furniture needs a standard one.

A seller may always issue a standard tax invoice instead of a simplified one. The simplified invoice is an allowance, not an obligation.

What must a standard tax invoice show?

A standard tax invoice carries the title Tax Invoice, the date and time of issue, the date of supply if different, a sequential number, the seller's name, address and VAT number, the buyer's name and address and, if registered, their VAT number, each line with its quantity, price, VAT rate and VAT, and the totals in riyals.

• Title: Tax Invoice.
• Date and time of issue, and the date of supply when it is different.
• A sequential number that identifies the invoice.
• The seller's name, address and VAT number.
• The buyer's name and address, and the buyer's VAT number when registered.
• For each line: description, quantity, unit price, VAT rate and VAT amount.
• The total before VAT, the VAT and the total including VAT, in Saudi riyals.

What must a simplified tax invoice show?

A simplified tax invoice must show at least the date of issue, the seller's name, address and VAT number, a description of the goods or services, the amount payable, and either the VAT in riyals or a clear statement that the amount includes VAT at 15%. It also carries the QR code ZATCA requires.

Take a grocery sale of SAR 90 plus SAR 13.50 of VAT. The simplified invoice may show the SAR 13.50 of VAT on its own line, or show SAR 103.50 with a clear statement that the amount includes VAT at 15%. Either way the customer sees what they paid and the tax inside it.

When must each invoice be issued?

A standard tax invoice must be issued no later than 15 days after the end of the month in which the supply took place. A simplified tax invoice is issued on the day of the supply or the day you are paid, whichever comes first, which is why it is printed at the till. Either invoice reaches the customer in the same time.

An invoice is issued once and its date cannot be changed afterwards. If something on it was wrong, you correct it with a credit or debit note that refers to it, not by editing or reissuing the original. A seller who supplies the same customer often may also issue one summary tax invoice for all supplies in a period of up to one calendar month.

How does each invoice reach ZATCA?

In the integration phase of e-invoicing, a standard tax invoice is sent to ZATCA's FATOORA platform for clearance before it is shared with the buyer. A simplified tax invoice is given to the customer at once, in print or electronically if agreed, and reported to FATOORA within 24 hours of being generated.

Which mistakes are common?

The most common mistake is giving a business customer a till receipt for a purchase of SAR 1,000 or more, which leaves them without a standard invoice to deduct their VAT. Others are missing the buyer's VAT number on a standard invoice, editing an issued invoice instead of issuing a note, and leaving the VAT off a consumer receipt.

• Ask at the till whether the customer is a business, and switch to a standard invoice when it is.
• Keep business customers' names, addresses and VAT numbers up to date.
• Show the VAT, or state that the price includes it, even when the buyer is not registered.

How DynamoOS helps

In Dynamo Finance you issue standard and simplified tax invoices, credit notes and debit notes, printed in Arabic and English side by side. Dynamo Point of Sale receipts are simplified tax invoices with the QR code. Phase 2 is built into Dynamo Finance: standard invoices are cleared and simplified invoices reported, after your own FATOORA onboarding.