Check before you rely on this. This is a general explainer, not tax or legal advice. E-invoicing requirements, phases and technical rules are set by ZATCA and are updated from time to time. Verify current requirements with ZATCA and your accountant.
What is ZATCA e-invoicing in simple terms?
ZATCA, the Zakat, Tax and Customs Authority, requires VAT-registered businesses in Saudi Arabia to issue invoices electronically in a prescribed format rather than on paper or as free-form PDFs. The requirement was introduced in phases, with later phases adding technical integration with the authority. Which phase applies to your business, and from when, is determined by ZATCA, so confirm it directly.
Why is this different for contractors?
A contractor rarely invoices the way a shop does. Billing follows the contract: interim payment certificates, retention, advance-payment recovery, variations and milestones. The tax invoice has to be consistent with those contractual numbers. If the certificate and the invoice disagree, the employer's finance team will query it and payment can slow down.
How do payment certificates relate to invoices?
The sequence on a typical project is:
- Measure the work done against the BOQ.
- The consultant certifies the amount in an interim payment certificate. Our explainer on the interim payment certificate (IPC) walks through it.
- You issue the tax invoice for the certified amount, in your accounting or invoicing system, in the format required.
- The employer pays, applying retention and any recoveries set by the contract.
Keeping step 1 to 2 clean makes step 3 easy. See also construction payment certification for the general logic.
What should a contractor do to be ready?
- Confirm your scope and timeline with ZATCA or your accountant. Do not assume.
- Decide which system issues the invoice. E-invoicing is normally an accounting-system function.
- Align your BOQ item numbers and descriptions with what the invoice will show, so reviewers can reconcile quickly.
- Make sure VAT, retention and recoveries are calculated the same way in the certificate and the invoice. The retention calculator can help you sanity-check the arithmetic.
- Keep the paper trail. Retain the measurement, certificate and invoice together.
What does Arkan do and not do here?
Arkan's Finance module builds payment requests from the BOQ and calculates retention, advance recovery and VAT, which helps you prepare consistent numbers. The BOQ module is where the underlying items live. Arkan does not claim to issue, sign or transmit ZATCA e-invoices, and using it does not make an invoice compliant. Your accounting system and adviser handle that step.
For project context in the Kingdom, see Arkan for Saudi Arabia.