Types of invoices under VAT in Saudi Arabia

Tally Solutions, Feb-03-2020

Invoicing is a fundamental activity of compliance under VAT in KSA. A person registered under VAT has to ensure that invoices are issued for all taxable supplies of goods or services. Further, these invoices should meet the criteria set by the VAT law in terms of the details required to be mentioned in an invoice, the language used in an invoice, the currency used for the values in an invoice, etc. An invoice is also very important for persons receiving taxable supplies, as a registered recipient of a supply can recover input tax paid on the supply, only on the basis of a valid and complete invoice. In this article, let us understand the types of invoices under VAT in KSA.

Types of invoices under VAT

Tax Invoice

A tax invoice is the document to be issued by persons registered under VAT in Saudi Arabia, evidencing that a taxable supply of goods or services has taken place. A Tax invoice should be issued for all taxable supplies of goods or services, where the value of the supply exceeds SAR 1,000. Tax invoices in Saudi Arabia should be issued in Arabic, in addition to any other language as a translation. The time within which a VAT invoice should be issued for a supply is latest by 15th of the month following the month in which the supply took place.

A detailed explanation of a tax invoice under VAT in KSA, as well as the mandatory information required in a tax invoice, has been given in our article 'VAT invoice in KSA'.

Simplified tax invoice

A simplified tax invoice is a simplified version of a tax invoice, in which fewer details are required to be mentioned, as compared to a tax invoice. A simplified tax invoice can be issued by a registered person for supplies of goods or services for value less than SAR 1,000. However, a simplified tax invoice cannot be issued in the following cases:

• Internal supplies, i.e. supply of goods or services to other GCC Countries
  
  
• Export of goods or services

A detailed explanation of a simplified tax invoice under VAT in KSA, as well as a sample format of a simplified tax invoice has been given in our article ‘Simplified tax invoice under VAT’.

Hence, tax invoice and simplified tax invoice are the two types of invoices under VAT in KSA. Based on the value of the supply, the type of invoice to be issued needs to be determined. If the value of the supply exceeds SAR 1,000, a tax invoice has to be issued and if the value of the supply does not exceed SAR 1,000, a simplified tax invoice has to be issued. A point to note under VAT in KSA is that even if the supply is to an unregistered person, if the value of the supply exceeds SAR 1,000, a tax invoice needs to be issued for the supply. Further, it is important to note that the key difference between simplified tax invoice and tax invoice is that in a simplified tax invoice, the recipient’s name, address or Tax Identification Number are not required to be mentioned. In this case, if the recipient is a registered person, a simplified tax invoice will not serve the purpose of recovering input tax on the supply. Hence, registrants under VAT in UAE should be clear about the difference between tax invoice and simplified tax invoice and issue the same based on the requirement.