VAT Compliance Guide for Saudi SMEs
Read time: 10 min read
VAT at 15% is now a daily reality for every business in the Kingdom. Errors in filings or invoices can result in penalties of up to SAR 50,000. This guide breaks down the requirements clearly and shows how EzSoft automates every step.
Who Must Register for VAT?
Registration is mandatory or voluntary depending on your revenue:
- •Mandatory: if annual taxable revenue exceeds SAR 375,000
- •Voluntary: if revenue exceeds SAR 187,500 (recommended — recover input tax on purchases)
- •Exempt temporarily: if revenue is below SAR 187,500
- •Registration is done via the ZATCA portal and takes 5-7 business days
Tax Invoice Requirements (Phase 1)
Every invoice you issue must include:
- •15-digit Tax Registration Number (TRN) for both seller and buyer
- •Invoice issue date and time
- •Detailed description of goods or services
- •Taxable amount and VAT amount shown separately
- •ZATCA-compliant QR code on every invoice
- •Unique invoice number (sequential or UUID)
Phase 2 E-Invoicing (ZATCA Integration)
Phase 2 requires connecting your system directly to ZATCA's Fatoora platform and submitting every invoice electronically before handing it to the customer.
- •Integration uses a standard API (PEPPOL BIS 3.0)
- •Each invoice receives a cryptographic stamp from ZATCA
- •Submission errors mean the invoice is not legally recognised
- •EzSoft is natively integrated with PEPPOL and submits invoices automatically
Periodic VAT Returns
Returns are filed monthly or quarterly depending on business size:
- •Monthly: for businesses with annual revenue above SAR 40 million
- •Quarterly: for all other registered businesses
- •Deadline: last day of the month following the end of the period
- •Late penalty: 5-25% of tax due
- •EzSoft generates the return report in one click — all figures calculated automatically
Common Mistakes to Avoid
These errors cause penalties for many businesses:
- •Issuing invoices without a QR code or with an incorrect one
- •Failing to separate the base amount from the tax amount
- •Applying the wrong tax category (15% vs 0% vs exempt)
- •Filing the return even one day late
- •Not retaining invoice records for at least 5 years
How EzSoft Handles All of This for You
Instead of tracking every requirement manually, EzSoft fully automates tax compliance:
- •Correct QR code generated automatically on every invoice
- •Direct submission to ZATCA (Phase 2) with no manual intervention
- •VAT return report ready to upload with all figures pre-calculated
- •7-day reminder before each filing deadline
- •Full invoice archive retained for 5 years
Book a Free Demo to See How EzSoft Meets ZATCA Requirements
Free trial — no commitment
Book a Free Demo