In brief
Invoice type is determined by buyer status — VAT-registered business gets a Tax Invoice; consumer or unregistered buyer gets a Simplified Tax Invoice. This is a tax rule, not a design preference.
The Core Rule — One Test, Two Invoice Types
A Tax Invoice is issued for supplies to VAT-registered buyers (B2B and B2G). A Simplified Tax Invoice is issued for supplies to consumers and non-registered buyers (B2C). The classification flows from the nature of the transaction — not preference — and determines the Phase 2 compliance model: clearance before sharing (Tax Invoice) or reporting within 24 hours after sharing (Simplified Tax Invoice).
| Feature | Tax Invoice | Simplified Tax Invoice |
|---|---|---|
| Issued to | VAT-registered buyers, government entities | Individuals, consumers, non-VAT-registered buyers |
| Phase 2 compliance model | Clearance — FATOORA must stamp before sharing | Reporting — share immediately, report within 24 hours |
| Buyer VAT number required | Yes — mandatory | No |
| Buyer name and address required | Yes — mandatory | No |
| Supports buyer input tax deduction | Yes | No |
| B2B supplies below SAR 1,000 | Seller may optionally issue simplified — but buyer can request Tax Invoice | Permitted — buyer loses input tax recovery |
Mandatory Field Differences — Phase 2
The fields where the two types diverge most significantly relate to buyer identification. Phase 2 adds additional fields beyond Phase 1 — including UUID, invoice issue time (HH:mm:ss), cryptographic stamp, and Previous Invoice Hash — to both types.
| Field | Tax Invoice | Simplified Tax Invoice |
|---|---|---|
| Buyer name | Mandatory | Not required |
| Buyer VAT registration number | Mandatory | Not required |
| Buyer address (street, building, city) | Mandatory | Not required |
| Invoice issue time (HH:mm:ss) | Mandatory | Mandatory |
| UUID | Mandatory | Mandatory |
| Cryptographic stamp (EGS-applied) | Mandatory | Mandatory |
| ZATCA cryptographic stamp (after clearance) | Mandatory — applied by FATOORA | Not applicable (reporting model) |
| 9-field TLV QR code | Mandatory | Mandatory |
| Exemption reason code (zero-rated / exempt) | Mandatory where applicable | Mandatory where applicable |
Worked Example — Two Invoice Types, One Business
Credit and Debit Notes — They Follow the Original Invoice
Credit notes and debit notes must follow the same classification as the invoice they are issued against. A credit note against a Tax Invoice is a Tax Invoice credit note — it must go through clearance. A credit note against a Simplified Tax Invoice follows the reporting model.
Both types must reference the original invoice. The Invoice Reference Number of the original must appear in the reference fields. A credit note without a valid reference fails FATOORA validation. Where a single credit note covers multiple original invoices, a range reference is permitted.
Edge Cases
Supplies below SAR 1,000 to a registered business buyer
For B2B supplies below SAR 1,000, the seller has the option to issue a Simplified Tax Invoice. The buyer accepts this — unless they need to claim input tax, in which case they can request a Tax Invoice. The rule permits — it does not force. A business that always issues Tax Invoices for B2B transactions, including low-value sales, is fully compliant.
Businesses serving both B2B and B2C customers
Both workflows must be configured in the EGS. Classification should be driven by whether the buyer provides a VAT registration number — and your system should prompt for this at transaction initiation, not as an afterthought.
Self-billed invoices
In B2B scenarios, a buyer may issue an invoice on behalf of the supplier (self-billing). Self-billed invoices are only applicable in B2B contexts — they are always Tax Invoices subject to clearance. The invoice must carry a self-billing flag, but the format and compliance model are identical to a standard Tax Invoice.
Key takeaways
- Invoice type is determined by buyer status — VAT-registered business gets a Tax Invoice; consumer or unregistered buyer gets a Simplified Tax Invoice. This is a tax rule, not a design preference.
- A Simplified Tax Invoice does not support a business buyer's input tax deduction. Issuing simplified invoices to registered business customers silently invalidates their VAT deductions — a problem that compounds over months.
- Credit notes follow the type of the original invoice. Configure this explicitly in your EGS and test it — it does not default correctly without specific setup.
- For B2B transactions below SAR 1,000, sellers may issue simplified invoices — but buyers can request a Tax Invoice to support their input tax claim.
- Getting invoice type classification right at system configuration costs a few hours. Fixing it retrospectively — reissuing invoices, handling VAT adjustments, explaining to customers — costs significantly more.
Frequently asked questions
What is the difference between a Tax Invoice and a Simplified Tax Invoice?
A Tax Invoice is issued for B2B supplies to VAT-registered buyers and must be cleared by ZATCA before being shared. A Simplified Tax Invoice is issued for B2C supplies to consumers, shared immediately, and reported to FATOORA within 24 hours. The Tax Invoice supports the buyer's input tax deduction claim; the Simplified Invoice does not.
Can my buyer claim VAT on a Simplified Tax Invoice?
Generally no. Simplified Tax Invoices do not support input tax deduction for business buyers. If a VAT-registered buyer needs to claim input tax, they must receive a Tax Invoice — either proactively issued by the seller for transactions above SAR 1,000, or requested by the buyer for smaller amounts where the seller issued a simplified format.
What happens if I issue the wrong invoice type?
Issuing a Simplified Tax Invoice to a VAT-registered business customer means that buyer cannot validly deduct input VAT. The practical consequence is operational: the buyer will request a corrected Tax Invoice, requiring you to issue a credit note against the original simplified invoice and a new Tax Invoice — adding administrative complexity for every affected transaction.
Do exempt and zero-rated supplies need e-invoicing?
Yes. The E-Invoicing Regulation covers all taxable supplies — including zero-rated and exempt. An invoice for an exempt or zero-rated supply must carry the applicable exemption reason code from ZATCA's approved list. Showing zero VAT without a reason code is non-compliant and will be rejected by FATOORA.
Do credit notes need to be cleared?
A credit note follows the compliance model of the original invoice it is issued against. A credit note against a Tax Invoice must go through clearance. A credit note against a Simplified Tax Invoice follows the 24-hour reporting model. Configure this specifically in your EGS — it will not default correctly without explicit setup.
Sources
This article reflects ZATCA's E-Invoicing Regulation (December 2020) and the Controls, Requirements, Technical Specifications and Procedural Rules Resolution (May 2023). For informational purposes only — not legal or tax advice. Confirm with zatca.gov.sa or a qualified Saudi tax advisor. dariba.co is an independent platform.
