Guidance on implementing penalty deductions in ZATCA-compliant XML invoices

General
1

Dear ZATCA Support,

We would like to seek clarification regarding the proper implementation of penalty deductions in e-invoices (UBL/XML) submitted to ZATCA.

In our business transactions (for example, with the Saudi Electricity Company), some invoices include a penalty amount due to late payment or other reasons. The penalty amount is deducted from the total payable amount, but it should not affect the taxable amount or the VAT calculation.

For example:

Net taxable amount: SAR 2,000

VAT (15%): SAR 300

Penalty deduction: SAR 200

Final payable amount = (Net taxable amount + VAT – Penalty)
Final payable amount: SAR 2,100

The VAT should still be calculated based on the taxable supply amount (SAR 2,000), regardless of the penalty deduction.

We plan to report the penalty as a separate Allowance/Charge line item with VAT category “O” (Out of Scope), so that it does not reduce the VAT amount.

Our questions:

Could you provide guidance on the correct XML/UBL structure for implementing such penalty deductions in ZATCA-compliant e-invoices?

Is it mandatory to include the penalty amount in the XML file even though it does not affect the VAT amount or the taxable amount?

Thank you in advance for your guidance.

2

@alialjabal your understanding is correct, if the deduction towards penalty does not impact taxable amount, you can use the tag for Document Level Allowance with O (out of scope) VAT Category Code. You will have to add another Tax Sub-Total towards VAT Category Code “O” with a negative value (-200), negative value is allowed in Tax Sub-total for VAT Category “O”.

It is not mandatory to include such deduction (which does not impact taxable amount) in the XML, but you can include it for better internal control and aligning interconnected processes.

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3

Thank you for your earlier clarification regarding Document Level Allowance with VAT Category Code O for penalty deductions.

I would like to confirm:

  • Is it also permissible to record such deductions at the Invoice Line level instead of the Invoice (Document) level?

  • If yes, could you please clarify the correct way to implement this in the XML (e.g., which tags/structure should be used for the line-level allowance)?

As mentioned, we already have Invoice Level allowance implemented, but we would like to understand whether a Line Level implementation is also supported and compliant with ZATCA specifications.

Best regards,

4

@alialjabal If you look at the Group ID BG-27 in Data Dictionary (allowance charges with indicator ‘false’”, you would notice that there is no field for providing a separate Tax Category for such allowance charge. It is linked with the tax category of the line item BT-151.

Therefore, this combination of treating allowance charge as out of scope is possible only at document level and not at line item level.

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