The ZATCA credit note: what it is
A credit note is an electronic document you issue to correct an invoice that was already issued, usually for a return or a mistake in price or quantity. The original invoice stays as it is on record, and the note records the reduction against it.
The Phase 2 rule is that corrections are made by credit or debit note and invoices are never edited. Deleting or amending an invoice after issuance is a violation that starts with a warning, then SAR 5,000 the second time, then 10,000, 15,000, 20,000 and 30,000, and SAR 40,000 after the sixth, under ZATCA's violations classification guide (2nd edition, May 2024, pages 6 to 13, in Arabic). The older SAR 10,000 figure came from the November 2021 announcement.
Credit versus debit
A credit note reduces what the customer owes, as with a return, a late discount or a price that was too high. A debit note is the opposite: it increases the amount when the invoice came out too low. Most of what a restaurant or shop needs is the credit note.
When to use one
These are the moments that call for a credit note instead of any thought of deleting or editing:
- A customer returns an item from their order after receiving it.
- A cashier rang up a wrong price and caught it after the invoice was issued.
- An order was cancelled after payment.
- A dish was cancelled because it was late or wrong and you refunded the amount.
- You agreed a reduction with the customer after the invoice because of a problem with the order.
Example: gift baskets before Eid
A customer buys three gift baskets before Eid on a single invoice. Two days later they return one because the occasion changed.
The original invoice for three stays. You issue a credit note for the returned basket only, and its value is refunded with its VAT at the correct rate. You don't delete the invoice, and you don't ring up a new invoice for two baskets, because that bypasses the chain.
Partial returns and VAT
On a partial return only the returned item's value and its VAT go back, not the whole invoice. If the item is SAR 100 before VAT, its VAT at the proper rate goes back with it. What matters is that the system works this out from the original invoice rather than a calculator at the counter, because a small VAT slip adds up by month end.
- Full return: the whole invoice goes back with its VAT.
- Partial return: the returned item goes back with its VAT.
- Several items: each is worked out at its own rate.
Before you issue one: who approves?
A credit note takes money out of the drawer or back to the customer, which makes it a place where fraud can happen. So don't let every cashier process returns. Set a refund permission and put anything above it behind the manager's PIN. Every note is logged with who issued it and when, and you can review that at the end of the week.
Credit notes on standard invoices
If the original is a standard invoice to a company, its return is a standard credit note too, and you tell the buyer so their accountant can update their records.
How CashHub handles returns
CashHub is built on the Phase 2 requirements. Connecting to the Fatoora platform is done with you during setup, with no technical configuration on your side. A return, full or partial, goes through a credit note with VAT worked out at the correct rate, and invoices are chained and can never be deleted. A return needs a permission or the manager's PIN, and every action is logged with the user's name and time.
Sources: What is e-invoicing (ZATCA) · ZATCA violations classification guide, May 2024 (Arabic) · ZATCA announcement on e-invoicing fines, November 2021
Frequently asked questions
Can I delete a wrong invoice and redo it?
No. Deleting or amending after issuance is a violation: a warning the first time, then SAR 5,000 the second time, then 10,000, 15,000, 20,000 and 30,000, and SAR 40,000 after the sixth. The right way is a credit note and a new invoice.
What is the difference between a credit and a debit note?
A credit note reduces what the customer owes and a debit note increases it. For a return you use a credit note.
Does a partial return refund all the VAT?
No, only the VAT on the returned item, at its correct rate.
Do I still need a credit note if the customer returns the item the same day?
Yes, once the invoice has been issued. Nothing on it is edited or deleted.
Who can issue a return in CashHub?
Whoever has the refund permission. Anyone else needs the manager's PIN. Every return is logged with the user's name and time.
Related pages
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