VAT on invoices in Saudi Arabia: how to calculate 15%

Key takeaways

• As of October 2026, the standard VAT rate in Saudi Arabia is 15 %. On an amount excluding VAT, multiply by 0.15 to get the VAT.
• To find the amount excluding VAT from a VAT-inclusive price, divide by 1.15. Never take 15 % off the inclusive price.
• Calculate VAT per line, round to two decimals (halalas), and make sure the line totals add up to the invoice totals.
• An issued invoice is never edited. To reduce or increase an amount, issue an electronic credit or debit note that references the original invoice, with its own VAT.
• A tax invoice shows the buyer's VAT number and lets the buyer deduct input VAT; a simplified tax invoice does not.

VAT on a Saudi Arabia invoice: the 15 % rule

Every VAT Saudi Arabia invoice question starts with one number: 15 %. As of October 2026, that is the standard rate of value added tax in the Kingdom, collected by ZATCA, the Zakat, Tax and Customs Authority. If you are VAT-registered, you add it to your taxable sales, show it on your invoices and pay it to ZATCA, minus the VAT you paid on your own purchases.

Some supplies follow different treatment, such as zero-rating or exemption. If you are unsure whether a sale is standard-rated, check ZATCA's guidance or ask your accountant before you invoice. Everything below assumes a standard-rated sale at 15 %.

The calculations themselves are simple. The mistakes come from working in the wrong direction, rounding in the wrong place, or fixing an invoice the wrong way. We will go through each with examples in SAR.

From excluding VAT to including VAT

When you set your price before VAT, the calculation is direct:

1. VAT = amount excluding VAT × 0.15
2. Total including VAT = amount excluding VAT × 1.15

Example. You invoice a consulting day at SAR 2,400 excluding VAT.

• VAT: 2,400 × 0.15 = SAR 360.00
• Total including VAT: 2,400 + 360 = SAR 2,760.00

This is the direction most B2B businesses use: prices are agreed excluding VAT, because the business client recovers the VAT as input tax. On the invoice, you show the amount excluding VAT, the rate, the VAT amount and the total including VAT.

From excluding to including, multiply by 1.15. From including to excluding, divide by 1.15.

From including VAT to excluding VAT: divide by 1.15

Shops, restaurants and salons usually display prices including VAT, because that is what the customer pays. To find the VAT inside such a price, divide, do not subtract.

1. Amount excluding VAT = price including VAT ÷ 1.15
2. VAT = price including VAT − amount excluding VAT

Example. A product sells for SAR 115.00 including VAT.

• Excluding VAT: 115 ÷ 1.15 = SAR 100.00
• VAT: 115 − 100 = SAR 15.00

The classic mistake. Many people take 15 % of the inclusive price: 115 × 0.15 = SAR 17.25. That is wrong, because the 15 % applies to the amount before VAT, not to the total. The VAT share of an inclusive price is 15 ÷ 115, about 13.04 %. Taking 15 % off the inclusive price overstates your VAT and understates your revenue.

A second example, with decimals. A service costs SAR 250.00 including VAT.

• Excluding VAT: 250 ÷ 1.15 = 217.391... rounded to SAR 217.39
• VAT: 250.00 − 217.39 = SAR 32.61

Notice that we calculate VAT as the difference, so that excluding VAT plus VAT always equals exactly the price the customer paid.

Per-line VAT and rounding on a Saudi invoice

A real invoice has several lines. The safest method is to calculate the VAT on each line, round each line to two decimals, then add up.

Example: a three-line tax invoice, prices excluding VAT.

• Line 1: 12 boxes of paper at SAR 18.75 = SAR 225.00, VAT SAR 33.75
• Line 2: 3 toner cartridges at SAR 146.90 = SAR 440.70, VAT SAR 66.11 (66.105 rounded)
• Line 3: delivery, SAR 35.00, VAT SAR 5.25
• Total excluding VAT: SAR 700.70
• Total VAT: SAR 105.11
• Total including VAT: SAR 805.81

If you calculated VAT once on the total instead, you would get 700.70 × 0.15 = 105.105, rounded to SAR 105.11. Here the two methods agree. On other invoices they can differ by a halala or two, because each line is rounded separately.

A halala is small, but a difference between what the lines say and what the total says looks like an error to a client's accountant. Three habits avoid it:

• Use one method for all your invoices, and let the software apply it.
• Make sure the VAT shown on the lines adds up to the VAT shown in the totals.
• Never adjust a total by hand to make it look round.

Discounts follow the same logic: apply the discount to the amount excluding VAT first, then calculate VAT on the discounted amount. A 10 % discount on SAR 1,000 gives SAR 900 excluding VAT, SAR 135 VAT, and SAR 1,035 including VAT.

What your VAT invoice in Saudi Arabia must show

Since Phase 1 of e-invoicing began on 4 December 2021, VAT-registered businesses must issue invoices electronically from a compliant solution. Which invoice you issue depends on the buyer.

Tax invoice (B2B and B2G). It carries full buyer details, including the buyer's VAT number, and the VAT broken down so the buyer can deduct it as input tax. Your own VAT number, which has 15 digits, appears on every invoice. For businesses in a Phase 2 wave, the tax invoice is cleared by ZATCA's FATOORA platform before you share it with the buyer.

Simplified tax invoice (B2C). It carries fewer buyer details and a QR code. It does not allow input VAT deduction. For businesses in a Phase 2 wave, it is reported to FATOORA within 24 hours.

The practical rule: if a business client tells you they need to recover the VAT, they need a tax invoice with their VAT number on it. Ask for it before you invoice, not after.

inyad Invoicing applies VAT per item or per document and calculates the totals for you, keeps sequential numbering, and sends the invoice with a payment link on WhatsApp, SMS or email.

Credit notes, debit notes and VAT

Once issued, an invoice is never edited. If the amount changes afterwards, because of a return, a discount granted later or a pricing error, you issue an electronic note that references the original invoice. The note carries its own VAT at the same rate.

Credit note example. You issued an invoice for 20 chairs at SAR 150 each: SAR 3,000 excluding VAT, SAR 450 VAT, SAR 3,450 total. The client returns 4 chairs.

• Credit note excluding VAT: 4 × 150 = SAR 600.00
• VAT reversed: 600 × 0.15 = SAR 90.00
• Credit note total: SAR 690.00
• Net position after the note: SAR 2,400 excluding VAT, SAR 360 VAT, SAR 2,760 total

Debit note example. You undercharged a delivery by SAR 200 excluding VAT. You issue a debit note for SAR 200 plus SAR 30 VAT, SAR 230 in total, referencing the original invoice.

Do not issue a new invoice with a negative line, and do not cancel and reissue the original with a different date. The note keeps the trail clear for you, for your client and for ZATCA. Invoices and notes must be kept for at least 6 years, in the Kingdom.

Common VAT mistakes on Saudi invoices

• Taking 15 % of an inclusive price. Divide by 1.15 instead.
• Rounding only at the end on some invoices and per line on others. Pick one method and keep it.
• Applying VAT before the discount. Discount first, then VAT.
• Giving a simplified invoice to a business client who needs to deduct VAT.
• A wrong VAT number. Yours has 15 digits; check your client's too.
• Editing an issued invoice instead of issuing a credit or debit note.
• Forgetting the VAT on a credit note. A credit note reduces both the amount and the VAT.

Penalties for invoicing and e-invoicing breaches exist and are published in ZATCA's violations guidance. Check the current amounts with ZATCA rather than relying on figures quoted online.

inyad Invoicing issues credit notes against the original invoice in a few taps, so returns and corrections never mean rebuilding a document by hand.

Frequently asked questions

How do I calculate 15 % VAT on an amount in SAR?

Multiply the amount excluding VAT by 0.15. For SAR 1,000 excluding VAT, the VAT is SAR 150 and the total is SAR 1,150. To go the other way, divide the total including VAT by 1.15: 1,150 ÷ 1.15 = SAR 1,000.

Why can't I just take 15 % off a VAT-inclusive price?

Because the 15 % was calculated on the amount before VAT. On a SAR 115 inclusive price, the VAT is SAR 15, not SAR 17.25. The VAT share of an inclusive price is about 13.04 %, which is why dividing by 1.15 is the correct method.

Should I round VAT per line or on the total?

Either can work, but be consistent, and make sure the line amounts add up to the invoice totals. Calculating per line and rounding each line to two decimals is a common approach in invoicing software, and the easiest to check line by line.

Can I change the VAT on an invoice I already sent?

No. Issued invoices are never edited. If the VAT was too high, issue a credit note; if it was too low, issue a debit note. Both reference the original invoice and carry their own VAT.