Electronic invoicing for small businesses in Saudi Arabia
E-invoicing has been mandatory in Saudi Arabia for all VAT-registered businesses since December 2021 (Phase 1). Small businesses not registered for VAT (sales below SAR 375,000) are not subject to e-invoicing, but adopting it early prepares you for growth. Modarhem lets a small business issue compliant e-invoices the moment they register — no separate ZATCA software, no third-party Billing Service Provider dependency. Every invoice carries the ZATCA QR; when you transition to Phase 2, digital signing and Fatoora submission happen automatically.
Do I need e-invoicing if my sales are below SAR 375,000?
No — e-invoicing is mandatory only for VAT-registered businesses. If your annual sales are below SAR 375,000 you are not required to register for VAT, and therefore not subject to e-invoicing. Adopting structured invoicing early makes future scale-up easier.
When does my small business need to comply with ZATCA Phase 2?
ZATCA announces compliance waves by annual revenue in descending order. Early waves targeted large taxpayers (≥ SAR 3 billion), and waves now reach small businesses. You receive an official ZATCA notice six months before your compliance date. Until then, Phase 1 invoices (QR + electronic storage) are sufficient.
What's the difference between a Phase 2 invoice and Phase 1?
Phase 1: electronic invoice + QR printed on simplified tax receipt. No live link to ZATCA. Phase 2: live Fatoora integration, digital signing with a CSID certificate, submission of every invoice to ZATCA before delivery (B2B Clearance) or within 24 hours (B2C Reporting). Modarhem builds the entire chain in-house.
Can I move directly from paper invoices to Modarhem?
Yes. When you register on Modarhem, pick a plan that includes the invoicing module, build your chart of accounts, add customers and suppliers, then start issuing new invoices from the cutover date. You do not need to re-enter historical invoices — opening balances are sufficient. Every new invoice carries the ZATCA QR automatically.
What if I issue a wrong invoice? Can I delete it?
You cannot delete an issued e-invoice (a legal principle — tax records must be preserved). The correct method: issue a Credit Note that cancels or adjusts the original invoice. Modarhem supports credit notes with reference to the original invoice and a ZATCA-compatible hash chain.
What does e-invoicing cost in Modarhem?
E-invoicing is included in your paid plan with no per-invoice surcharge. There are no invoice-by-invoice fees, and no separate digital signature to purchase — Modarhem manages the CSID certificate internally. The free tier includes a limited number of invoices per month.