# Credit Notes vs Debit Notes: A ZATCA Compliance Guide *Handling returns and financial adjustments the way the Zakat, Tax and Customs Authority requires* > **In short:** A practical guide to credit and debit notes: when to use each one, and how to issue them legally under ZATCA's Saudi e-invoicing rules with Snad. - **URL:** https://www.snad.io/en/blog/credit-and-debit-notes-guide-zatca - **Arabic original:** https://www.snad.io/blog/credit-and-debit-notes-guide-zatca - **Category:** Explainers — ZATCA & Tax - **Tags:** Credit Note, Debit Note, ZATCA, E-Invoicing, Snad - **Published:** 2026-05-10 - **Updated:** 2026-08-02 - **Publisher:** Snad (snad.io) In day-to-day trade, things rarely go exactly to plan. A customer returns damaged goods. You discover that an invoice was issued for less than the real amount. Or you decide to grant a special discount after the final invoice has already gone out. Under the old paper system, some businesses simply tore the invoice up or crossed it out. In the age of 'e-invoicing', and under the supervision of the Zakat, Tax and Customs Authority (ZATCA), amending an invoice is governed by strict rules. This is where the 'credit note' and the 'debit note' come in. These two documents are the only legal way to amend a tax invoice that has already been issued and reported to the system. This guide explains, in plain language and through real-world situations, when to use each one and how Snad keeps you fully compliant with these rules. ## Credit Note: When Is It Your Ally in Handling Returns? A credit note is a document the seller issues to the buyer to reduce the value of an invoice issued earlier. Think of it as an acknowledgement that you owe the customer something, or as a reduction in what you are claiming from them. The most common situations are: 1) goods returned, in full or in part. 2) damaged products that justify a price reduction. 3) a discount granted to the customer after the invoice was issued (a volume discount, for example). 4) an error in the original invoice that recorded an amount higher than what was agreed. In accounting and tax terms, a credit note reduces your sales and reduces the Value Added Tax (VAT) you have to pay the Authority. That makes it a highly sensitive document, and it must always be linked to the original invoice, which Snad does automatically to keep the sequence correct. ## Debit Note: How Do You Correct a Shortfall in Your Invoices? A debit note works the other way round: the seller issues it to the buyer to increase the value of an invoice issued earlier. It acts as an 'additional invoice' attached to the original one. It is used in less frequent but very important cases, such as: 1) discovering that you recorded a price lower than the actual one by mistake. 2) providing extra services tied to the same invoice that were not counted at the outset. 3) correcting the tax amount when it was calculated at the wrong rate. By issuing a debit note, you increase what the customer owes you, and you also increase your tax liability towards the Authority. Snad makes this easy through the 'Amend invoice' option, which creates a debit note linked to the original invoice number. Your financial audit trail stays clear and easy to follow for any tax inspector. ## ZATCA's Mandatory Requirements for Issuing Notes The Zakat, Tax and Customs Authority does not accept ad hoc notes. An electronic note has to meet a set of technical and legal conditions. First, it must carry a clear reference to the original invoice (its number and date). Second, it must state the reason for the amendment (a return, a pricing error, and so on). Third, it must follow the same electronic invoice specification, including the QR code and the digital signature in Phase Two (integration). Fourth, the note itself cannot be amended; if you make a mistake on a note, you have to issue another note to correct it. With Snad, all of these technical requirements are built into the back end, so you issue your notes at the click of a button and stay confident that you are compliant. ## Practical Cases from the Saudi Market: When to Issue What Take a carpentry workshop as an example. You contract with a customer to make 10 chairs for SAR 5,000 and you issue the invoice, then the customer decides to take only 8 chairs. Here you issue a 'credit note' for the value of the two remaining chairs. If instead the customer asks to add premium upholstery after the invoice was issued and it was not included, you do not cancel the invoice: you issue a 'debit note' for the value of the extra upholstery. In retail, if a customer returns a shirt bought during a promotion, the credit note has to match the price the customer actually paid (after the discount) so the tax refund is accurate. Snad handles these scenarios with the flexibility your business needs, whatever sector you work in. ## Frequently asked questions ### Can I cancel the invoice instead of issuing a credit note? Under e-invoicing, an invoice cannot be 'deleted' once it has been issued and reported. The legal way to cancel its effect entirely is to issue a credit note for its full value. ### Does the customer have to approve the note? What matters is handing the customer a copy of the note, just as you would an invoice, so that they can adjust their own books and their input tax accordingly. --- ## About the publisher **Snad (سند)** — a private Saudi software company based in Riyadh, founded 2025. Legal form: Sole proprietorship. Commercial registration: 7038154642 VAT number: 310959226500003 Only official domain: snad.io > Snad is a private commercial business-management platform. It is not a > government body, not a bank, and not a government services portal, and it > is not affiliated with any government entity. Any site or app with a > similar name is unrelated to Snad.