Credit Note Generator

A credit note is a document the seller issues when the value of an invoice already issued goes down. The Zakat, Tax and Customs Authority defines it in the Detailed Guidelines for E-Invoicing as the note issued by the seller to refund a difference in value or tax in the buyer's favour, used to correct invoice information (clause 2.6). The Simplified Guideline for notes puts it more plainly: an adjustment that reduces the invoice value.

When to issue a credit note

Whenever the value of a supply you have already invoiced goes down: goods returned, a line cancelled because it was never delivered, a discount granted after issue, or a price corrected downward. What they share is that the original invoice stays in force and is not cancelled; the note adjusts it.

Credit note versus debit note

• A credit note reduces the value of the original invoice or its tax amount, and the difference goes back in the buyer's favour.
• A debit note increases it, and is used when you find the invoice was issued for less than what was due (clause 2.5 of the same guidelines).

The reference to the original invoice

This is the field that makes the document a note rather than a second invoice. Clause 4.3 of the Detailed Guidelines states that credit and debit notes must be issued by reference to the original invoice or invoices already issued:

1. Enter the serial number of the original invoice in the reference field. The tool blocks the download until it is filled in.
2. If one note covers several invoices, the same clause permits entering the numbers as a range such as INV-001 — INV-005.
3. The date of the original invoice appears next to its number on the document and makes reconciliation easier at review.
4. The reason for issue is optional in this tool. No clause in the guidelines requires it, but writing it helps the buyer and the reviewer.
5. Line details match what the original invoice stated for the quantities returned or adjusted.

Worked example — sales return

You sold goods for 2,000 and added VAT at 15%, or 300, so the invoice totalled 2,300. The customer then returned a quarter of the quantity:

1. Value of the return before tax: 2,000 ÷ 4 = 500.
2. Tax on the return: 500 × 15% = 75.
3. Credit note total: 500 + 75 = 575.
4. The original invoice stays at 2,300, and the net supply after the note is 1,725.

Common mistakes

• Issuing an invoice with a negative value instead of a credit note. A negative invoice is not a defined document; the note is the correct form.
• Omitting the reference to the original invoice, which clause 4.3 requires.
• Cancelling the original invoice after issuing the note. The original stays and the note adjusts it.
• Applying a tax rate on the returned value that differs from the rate on the original invoice.
• Issuing a credit note against an invoice that has not been issued yet. A note follows an existing invoice, it does not precede one.

What this tool does not do

The tool produces a human-readable visual document carrying the reference to the original invoice and a QR code in the Phase One encoding. It is not an approved technical solution, and it does not implement the integration phase requirements of a cryptographic stamp and clearance through the Fatoora platform. To issue notes inside an integrated workflow, use invoicing software that complies with the specifications.