Types of Electronic Invoices in Saudi Arabia

Electronic invoices in Saudi Arabia are classified into two main types defined by the Zakat, Tax and Customs Authority (ZATCA): the tax invoice and the simplified tax invoice. Each type has its own requirements, mandatory fields, and use cases, and they also differ in how they are handled on the Fatoora platform in the second phase. Knowing the correct type is not a technical detail but a fundamental condition for compliance and avoiding fines. In this guide we explain each type in detail, when to use it, and how your accounting system selects the right type automatically.

Two fundamental types of electronic invoices

Approved electronic invoices in Saudi Arabia are divided into the tax invoice and the simplified tax invoice. The following diagram summarizes the difference between them before we detail each type on its own.

Why did the Authority split invoices into two types?

Before getting into the details, it helps to understand the logic behind the split. The nature of a transaction differs between one business selling to another business and a business selling to an ordinary consumer in a store. A business-to-business transaction requires full documentation that links the seller to the buyer for the purpose of deducting input tax. Retail sales, on the other hand, happen in large volumes and at speed at the point of sale, and usually do not require the buyer’s tax number.

For this reason the Authority designed two types: a fully documented type that undergoes instant review before it is delivered, and a simplified type that is issued directly and reported afterward. This balance preserves the accuracy of the tax system without disrupting the flow of sales in stores.

The split itself is not new to the VAT system, but electronic invoicing moved it from paper to a unified digital format. Today each type is issued in a structured format (XML, or PDF/A-3 with embedded XML) and carries data that is machine-readable by the Authority.

The first type: the tax invoice

The tax invoice is the full invoice issued in business-to-business (B2B) transactions, or between a business and government entities (B2G). This type is intended for a customer registered for VAT, because they use the invoice to deduct input tax from their tax return.

Mandatory fields in the tax invoice

The tax invoice includes a set of data, none of which may be omitted:

• The seller’s full name, address, and tax number.
• The buyer’s full name and address, in addition to the buyer’s tax number if they are registered.
• The date and time the invoice was issued (the timestamp).
• A unique sequential invoice number.
• A breakdown of the goods or services, quantities, and prices before tax.
• The value of value-added tax at 15% and the total amount including tax.

In the second phase, mandatory technical fields are added: the digital signature (Cryptographic Stamp), the unique invoice identifier (UUID), the hash value of the previous invoice to ensure a sound sequence, and the QR (Quick Response) code that carries the invoice data and its signature.

The «Clearance» procedure

The most distinctive feature of the tax invoice in the second phase is that it undergoes the clearance procedure. This means your system sends the invoice to the Fatoora platform for approval before delivering it to the buyer. The platform verifies the accuracy of the data and the signature, then returns the invoice cleared. The invoice is not considered valid until it has been cleared.

This procedure is usually instant, but it requires your accounting system to be connected directly to the platform. This is why businesses need a system compliant with the second phase capable of signing, sending, and receiving in a single step without manual intervention.

When do you issue a tax invoice?

Issue a full tax invoice whenever your customer is a business or a government entity, especially if they are registered for VAT and wish to deduct the tax. Examples include a wholesale sale to another store, providing a consulting service to a company, or supplying equipment to a government entity. For more on timing of issuance, see when the electronic invoice must be issued.

The second type: the simplified tax invoice

The simplified tax invoice is the type issued in retail transactions with the end consumer (B2C). Imagine a restaurant, a pharmacy, or a grocery store selling to dozens of customers per hour. These customers are individuals who do not deduct input tax, so there is no need to fully document their data.

What makes it «simplified»?

The simplified invoice has fewer mandatory fields. It does not require the buyer’s tax number or address, but it remains bound to essential elements:

• The seller’s name and tax number.
• The date and time of issuance.
• A description of the goods or services and their value.
• The value-added tax amount and the total including tax.
• The QR (Quick Response) code that enables quick verification of the invoice.

The QR code is an essential element of the simplified invoice. It carries a brief summary of the seller, the invoice, and the tax in a format the Authority or the customer can read instantly via a dedicated app.

The «Reporting» procedure

Unlike the tax invoice, the simplified invoice does not undergo instant clearance. The system issues it and delivers it to the customer directly at the point of sale, then uploads it to the Fatoora platform via the reporting procedure within 24 hours of issuance. This ensures continuity of sales without waiting for platform approval on every transaction, while keeping the Authority informed of all transactions.

A comparison table between the two types

Before getting into the details of choosing, the following table summarizes the fundamental differences between the tax invoice and the simplified invoice in quick points.

Summary of the four differences

The fundamental differences between the two types come down to four points: the audience, the mandatory fields, the compliance procedure, and the timing of transmission. The tax invoice is for businesses and government entities, requires the buyer’s tax number, and undergoes instant clearance before delivery. The simplified invoice is for the end consumer, carries a QR code instead of the buyer’s tax number, and undergoes reporting within 24 hours.

For a deeper understanding of the difference between the term «electronic invoice» as a general framework and the «tax invoice» as a specific type, see the difference between the electronic invoice and the tax invoice. And if you are still at the beginning of the journey, the guide what is an electronic invoice helps you build the full picture.

Related notes: credit and debit

Alongside the two main types, there are complementary documents that are no less important: credit and debit notes. A credit note is issued to reduce the value of a previous invoice, such as returning part of the goods or granting a discount after issuance. A debit note is issued to increase the value, such as correcting a price that was entered lower than it should have been.

Notes are part of the invoicing system and follow the same compliance rules applied to the type of the original invoice. That is, a note that amends a tax invoice undergoes clearance, and a note that amends a simplified invoice undergoes reporting.

How do you choose the correct type?

The governing rule is simple: the type is determined by the nature of the customer, not by the size of the amount nor by the type of goods.

• Your customer is a registered business or a government entity that wants to document the transaction to deduct tax: issue a tax invoice in full.
• Your customer is an end consumer buying for personal use: issue a simplified tax invoice.

A common mistake is that some merchants issue a simplified invoice to a business customer, thereby denying them the tax deduction and exposing themselves to remarks from the Authority. Compliant accounting systems solve this problem by recognizing the type of customer and creating the correct type automatically.

Remember that compliance with electronic invoicing is mandatory for every business registered for VAT. To learn exactly who the mandate covers, see who is required to issue electronic invoices.

Common mistakes in choosing the invoice type

Some mistakes recur among businesses that manage invoicing manually or with a non-compliant system:

• Issuing a simplified invoice to a registered business, thereby denying the buyer the input tax deduction.
• Omitting the buyer’s tax number on the tax invoice, which makes it incomplete and may cause it to be rejected in clearance.
• Failing to report the simplified invoice within 24 hours, which may expose the business to a fine.
• Issuing a credit or debit note without linking it to the original invoice, so the document loses its connection to the transaction.

All these mistakes vanish when verification and linking are part of the system itself, rather than a manual task the employee performs on every transaction.

How does Qoyod help you issue the correct type?

Qoyod is a cloud accounting software compliant with the second phase of electronic invoicing, and it handles both types automatically:

• Determining the type by customer: When a business customer is selected, the system creates a full tax invoice, and when selling via point of sale to a consumer, it creates a simplified invoice without manual intervention.
• Signing and linking with the Fatoora platform: Qoyod signs every invoice digitally, sends the tax invoice for clearance, reports the simplified invoice within 24 hours, and manages the CSID certificate automatically.
• QR code and hash chain: The system generates the Quick Response code and the hash value linked to the previous invoice to ensure a sound sequence.
• Related notes: Credit and debit notes are issued linked to the original invoice and follow its same compliance rules.

Practical examples: which type do you issue in each case?

The best way to cement the difference is to tie it to real-world cases a merchant faces daily. Here are common scenarios in the Saudi market:

A retail store in a shopping mall

The store sells to dozens of individual customers every hour. The majority are end consumers who do not need tax documentation. The appropriate type here is the simplified tax invoice issued from the point of sale with a QR code. But if a customer requests an invoice in the name of their business with its tax number, the merchant immediately switches to issuing a full tax invoice for that specific transaction.

A building-materials supply company

Most of the company’s customers are contractors and registered businesses. Almost every transaction warrants a full tax invoice that includes the buyer’s tax number, because the contractor will deduct input tax. Here the tax invoice is the rule, not the exception, and every invoice undergoes clearance before it is delivered.

A restaurant or café

The restaurant issues simplified invoices to its diners at the tables and in takeaway service. But when organizing an event for a company or signing a catering contract, it issues a full tax invoice in the company’s name. This mix of the two types is common in the hospitality sector, which is why restaurants need a system that moves between the two types smoothly.

A professional services office

Consulting, accounting, and legal offices deal mostly with businesses, so they issue full tax invoices. But if they provide a service to an individual, such as preparing a tax return for a person, the simplified invoice is more appropriate. The rule is constant: the customer determines the type.

Steps to issue each type in a compliant system

In practice, issuing either type does not require deep technical expertise when the system is compliant. The difference appears in the background, not in the user interface.

Issuing a tax invoice

• Select the customer from the business register, and make sure their tax number is entered.
• Add the line items for the goods or services with their quantities and prices before tax.
• The system calculates value-added tax at 15% and adds it to the total.
• The system signs the invoice digitally and sends it to the Fatoora platform for clearance.
• After the platform’s approval, the cleared invoice is delivered to the buyer in its final form.

Issuing a simplified invoice

• The sale takes place at the point of sale to the end consumer.
• The system creates the invoice with the Quick Response code instantly.
• The invoice is delivered to the customer, printed or digital, on the spot.
• The system uploads the invoice to the Fatoora platform via reporting within 24 hours.

The fundamental difference in the steps is the moment of connection to the platform: before delivery in the tax invoice, and after it in the simplified invoice. This technical difference is what makes selling in stores smooth without waiting for approval of every transaction.

The technical difference: clearance vs. reporting in detail

The clearance and reporting procedures deserve a deeper explanation because they are the essence of the distinction in the second phase. In clearance, the invoice’s validity depends on the platform’s approval. The invoice is sent signed, the platform verifies the validity of the signature, the sequence of the hash value, and the completeness of the fields, then returns it cleared. Any error in the data halts approval, so an incomplete invoice never reaches the buyer in the first place.

Reporting, on the other hand, grants the business greater flexibility. The invoice is valid the moment it is issued and delivered, and the upload to the platform takes place within a 24-hour window. This suits the nature of high-volume retail, where it is impossible to wait for instant approval of every small purchase.

In both cases the digital signature, the QR code, and the hash value of the previous invoice remain shared elements that ensure the integrity of the invoice chain and that it cannot be tampered with retroactively. The compliant system manages these elements automatically, including the business’s CSID certificate.

From paper to the unified digital format

Before electronic invoicing, invoices were written by hand or printed from text files, which opened the door to errors, forgery, and difficulty in auditing. The Authority moved the system to a unified digital format (XML, or PDF/A-3 with embedded XML) that the system reads automatically. This shift did not change the classification of invoices; it made each type more accurate and secure.

The difference between the paper invoice and the electronic invoice goes beyond form to substance: the electronic invoice is digitally signed, linked to an invoice chain, and instantly verifiable. For more detail, see the difference between the electronic invoice and the paper invoice.

This shift brings direct benefits to the business: fewer errors, faster collection, and easier preparation of tax returns. You will find a detailed account of these gains in the benefits of the electronic invoice for Saudi businesses.

A look at the phases and the regulatory framework

Understanding the two invoice types is completed by understanding the phase in which they apply. In the first phase (generation), all that was required was to create the invoice electronically and store it in a structured format, without a direct link to the Authority. The second phase (linking and integration) added clearance, reporting, and the digital signature. For detail, see the first phase of the electronic invoice and the second phase and its details.

. The technical conditions that must be met in the invoice also differ according to its type and phase. You will find a full list in the requirements of the electronic invoice.

The QR (Quick Response) code: why is it central to the simplified invoice?

The QR code is not merely a cosmetic addition to the simplified invoice; it is an instant verification tool. The code carries encrypted data about the seller’s name and tax number, the invoice’s date and time, the total amount, and the tax value. In the second phase, the code also carries the digital signature data.

The practical benefit is that any party, whether the customer or an inspector from the Authority, can scan the code with a dedicated app and confirm the invoice’s validity in seconds without going back to the seller. This raises trust in retail invoices and makes them harder to tamper with. That is why the absence of a QR code from the simplified invoice is a clear violation, not merely a formal shortcoming.

In the tax invoice, the QR code also appears in the second phase, but its role is complementary to an already detailed invoice, whereas in the simplified invoice the code is the primary carrier of the data that is hard to print in full on a small receipt.

How do you verify that your business is issuing the correct type?

If you run a business and want to make sure your invoicing is sound, review these points:

• Does your system automatically enter the tax number of business customers on their invoices?
• Does every simplified invoice carry a valid, scannable QR code?
• Are tax invoices actually sent for clearance before delivery, not after?
• Are simplified invoices reported within the 24-hour window without delay?
• Are credit and debit notes automatically linked to the original invoices?

Answering yes to these points means your business is on the right track. Any answer of no calls for a review of your accounting system, because handling these details manually opens the door to error and fines. A compliant system turns these points from daily tasks into settings that work in the background.

Mandatory fields: a detailed comparison

One of the clearest differences between the two types is the number of fields that must be present. The tax invoice is more detailed because it is a complete tax document the buyer relies on. The simplified invoice is lighter because it serves a quick sale to a consumer who does not deduct tax.

The tax invoice requires the buyer’s data in full along with their tax number, while the simplified invoice suffices with the seller’s data and a QR code. This difference explains why the simplified invoice is issued quickly at the point of sale without entering customer data on every transaction. The format for presenting the tax also differs: in the tax invoice the tax base is broken down for each line item, while in the simplified invoice the total tax on the invoice is sufficient.

Despite this difference in the number of fields, the digital signature, the QR code, and the hash value remain shared elements in the second phase between the two types. What changes is the content of the QR code: in the simplified invoice the code carries broader data that removes the need to print many details, and in the tax invoice the code complements an already detailed invoice.

The role of the buyer’s tax number

The buyer’s tax number is the practical divider between the two types. Its presence means the transaction is between two registered businesses, and that the buyer will use the invoice to deduct input tax. Its absence means the buyer is an end consumer. This is why entering the customer’s tax number in their record is an important step, because it automatically determines the type of invoice the system creates for every subsequent transaction.

The impact of choosing the type on the tax return

Choosing the correct type does not concern the buyer alone; it also reflects on the seller’s own return. All issued invoices, whether tax or simplified, enter into the output tax the seller declares. But accuracy of classification eases reconciliation during audits and prevents confusion that could delay approval of the return.

When invoices are automatically classified, signed, and reported on time, preparing the periodic return becomes a matter of aggregating ready figures instead of an exhausting manual review. This is one of the most important reasons businesses rely on an accounting system that links invoicing to the return in one place, so human error is reduced and working hours are shortened at the end of each tax period.

The most important caveat remains that the accounting system prepares the return’s data, but filing the return and paying the tax are done through the Authority’s portal by the business itself or its accountant.

Frequently asked questions

Read also in the electronic invoicing hub

• What is an electronic invoice?
• the difference between the electronic invoice and the tax invoice
• when the electronic invoice must be issued
• who is required to issue electronic invoices
• Types of credit and debit notes