𝐙𝐀𝐓𝐂𝐀 𝐍𝐨𝐦𝐢𝐧𝐚𝐥 𝐈𝐧𝐯𝐨𝐢𝐜𝐞

A ZATCA Nominal Invoice is issued when goods or services are provided for free or at a discounted price, such as during promotions or special offers. Even in these cases, businesses must follow Saudi Arabia's VAT rules by including VAT details on the invoice.

• Free Goods/Services: VAT is calculated based on the market value of the items.
• Discounted Price: VAT is applied to the reduced price.

Key Points for ZATCA Nominal Invoices

1.Purpose of Nominal Invoice

• A nominal invoice is primarily used for record-keeping to document a taxable supply.
• The supplier retains the invoice since they are responsible for reporting and paying VAT to ZATCA.
• The customer may receive a zero-amount invoice or an invoice reflecting only the taxable value and VAT for reference.

2.Key Scenarios for Nominal Invoices

• Self-Billed Transactions: Where the buyer issues the invoice, but the supplier remains liable for VAT.
• Related Party Transactions: In cases of transactions between related parties, nominal invoices document the taxable supply for compliance purposes.
• Non-Monetary Supplies:Barter transactions or supplies without direct monetary exchange (e.g., promotional goods, free samples, etc.).
• Government Supplies: Supplies to certain government entities where payment is handled differently (e.g., GAZT invoices under Saudi public procurement rules).

3. Treatment of VAT

• Supplier Responsibility: VAT is reported and paid by the supplier to ZATCA
• Customer Record: The customer receives the invoice as documentation but does not make VAT payment to the supplier.
• Zero Amount for Customer: A nominal invoice for the customer may show the net value as "0" or "Not Payable."

4.Exceptions:

• Supplies that are zero-rated (e.g., exports) or exempt (e.g., healthcare) do not attract VAT, even for nominal transactions.
• Specific exemptions may apply for gifts, donations, or promotional items under certain thresholds.

5. Benefits of Nominal Invoices

• Provides transparency in taxable transactions without requiring payment from the customer.
• Ensures compliance with ZATCA rules, especially in complex scenarios (e.g., barter, promotions, or related-party dealings).
• Reduces disputes or confusion about VAT responsibilities in customer-supplier relationships.

Calculating VAT on Nominal Invoice: -

1. Goods or Services Provided at No Cost< /h4>

In celebration of Saudi National Day, London Bakery is offering a Pistachio Chocolate Kunafa worth SAR 100 for free. VAT rate of 15%.

• Market value of the product is 100
• VAT rate is 15%

Calculate the VAT Amount

• VAT Amount = Market Price x VAT Rate = 100 × 15% = 15
• Total invoice amount = SAR 100 + 15 =115

➨ Here, a business provides a product or service for free, such as a promotional offer or a gift. Despite the goods or services being provided at no charge, the business is still required to issue an invoice and calculate VAT based on the market value of the item. It will be shown in additional discount.

2.Goods or Services Provided at a Reduced Price

In celebration of the holiday season, Trendy Tees, a popular branded t-shirt company, is offering a 50% discount on all t-shirts. Customers can shop online or in-store and get their favourite designs at half price.

• The T-shirt is being sold at a 50% discount.

Calculate the VAT Amount

• Discounted Price= SAR 400 x 50% = SAR 200
• VAT Amount = Discounted Price × VAT Rate =200×15%=30
• Total invoice amount = SAR 200 + 30 =230

➨ Here, a business provides a product or service at a discounted price. Such as a product that normally costs SAR 200 is being offered at a 50% discount. It is calculated based on market value of the item.

3.Goods or Services Provided for Free with a Conditional Purchase (Bundle)

In a special offer, Bag centre is running a Buy 1 Get 1 Free promotion on all bags. Customers who buy one bag for SAR 300 will get another bag for free.

• Product 1: Bag worth 300 SAR
• Product 2: Bag worth 200 SAR

Calculate the VAT Amount

• VAT Amount for Product 1 = Market Price x VAT Rate = 300 × 15% = 45
• Total Amount: SAR 345
• VAT Amount for Product 2 = 200×15% = 30
• Total Amount: SAR 230
• Total Invoice Amount = SAR 345 + SAR 230 = SAR 575

➨ Here, businesses may offer goods or services for free with the condition that the customer makes a related purchase. For instance, a customer might receive a free product if they buy another product. In this scenario, VAT must be calculated for the free product based on its market value.