ZATCA e-invoicing for Umrah companies: a Phase 2 guide
Clearance and reporting, advance payments, and credit notes when bookings are cancelled: what your finance team needs to know.
In an Umrah company an invoice never comes alone: a deposit from an agent, then the booking invoice, then a change in the number of seats, then a partial cancellation and refund. Each of these is an electronic document that must be issued in the right form and go through ZATCA.
In Phase 2 of e-invoicing (the integration phase), invoicing systems connect to Fatoora, the platform of ZATCA, the Zakat, Tax and Customs Authority. This guide explains what changes for Umrah companies, in a finance team’s language rather than a developer’s.
The two phases, and when the second applies to you
Phase 1 (generation) began on 4 December 2021: invoices and notes issued from compliant electronic solutions. Phase 2 (integration) began on 1 January 2023 and applies to groups of taxpayers chosen by criteria ZATCA sets, each group notified at least six months before its date.
If your notice hasn’t arrived yet, it’s better for your system to be ready before it does: six months pass quickly in an Umrah season.
Standard and simplified invoices
Invoices to businesses are standard tax invoices under the clearance model: they go to ZATCA and are stamped before you share them with the buyer, and they aren’t valid without it. Invoices to individuals are simplified invoices under the reporting model: you hand them over at once and upload them to ZATCA within 24 hours of issue.
| Item | Standard tax invoice | Simplified tax invoice |
|---|---|---|
| Who it’s for | Businesses | Individuals |
| Model | Clearance | Reporting |
| When it reaches ZATCA | Before you share it with the buyer | Within 24 hours of issue |
| Handing it over | After ZATCA clears and stamps it | At once, printed, or electronically if agreed |
| Its credit and debit notes | Cleared like the invoice | Reported like the invoice |
Which buyers count as businesses, and the VAT on each line of a package, are questions for your tax adviser and ZATCA’s own guidance; this guide doesn’t set the VAT treatment of Umrah packages.
What every e-invoice carries
An e-invoice is issued as XML, or as a PDF/A-3 carrying the XML inside it, with a cryptographic stamp from your invoicing solution, the previous invoice’s hash that chains your invoices together, and a QR code.
- Chaining by hash means no invoice can drop out of the series unnoticed
- The buyer’s tax details are current before the invoice is issued, agents especially
- A simplified invoice is shown to the customer as soon as it’s issued
Cancelling and changing: credit and debit notes
An issued invoice is never edited or deleted. If an agent cancels seats or a price changes, you issue a credit note that lowers the value or a debit note that raises it, and every note refers to the number of the original invoice it adjusts. To “cancel” an invoice entirely, the way is a credit note for its value, then a new invoice if needed.
A note follows its invoice’s type: a standard invoice’s note is cleared like it, a simplified invoice’s note is reported like it. In an Umrah company most notes come from cancellations, so give them a routine:
- Agree the settlement first: what was paid, what you keep under the terms, what goes back
- Issue the credit note against the original invoice for the amount going back
- Send it for clearance or reporting, following its invoice’s type
- Record what you recover from suppliers on their accounts
Advance payments
Receiving an advance payment for a taxable supply requires a tax invoice for it. When the booking invoice is issued later, it accounts for what was paid in advance and refers to the advance-payment invoice, so the VAT isn’t counted twice.
Deposits from agents before a group is confirmed are common in Umrah companies; agree with your tax adviser when one becomes an advance payment that needs an invoice.
Where the mistakes usually happen
In an Umrah company, invoices multiply with deposits, changes and cancellations. Linking every note to its original invoice by hand, across thousands of bookings, is where most errors happen.
- A credit note that doesn’t refer to its original invoice
- A standard invoice handed to the agent before it was cleared
- Simplified invoices not reported within 24 hours after a connection outage
- Out-of-date tax details for an agent or customer
- An invoice “edited” instead of a note being issued
This guide is general information, not tax advice. Check what ZATCA publishes and your group’s date, and ask your tax adviser about your own case.
How Umrah Link helps
Your company’s e-invoicing unit is onboarded with ZATCA, and invoices and credit and debit notes become UBL e-invoices with the hash, signature and QR code. Standard ones go for clearance and simplified ones are reported, a rejected one is corrected with a new e-invoice, and all of them post to one double-entry ledger.
When a paid booking is cancelled, the settlement is prepared and approved before the cancellation, and the credit note carries its original invoice and reason. Money received before an invoice is held as an advance on the agent’s or customer’s account and applied to its invoices.
Common questions
Does Phase 2 apply to every Umrah company now?
It applies to groups ZATCA selects and notifies at least six months before their date. Check ZATCA’s notices for your group and date.
Can we edit an issued invoice if we made a mistake?
No. An issued invoice is never edited or deleted; the mistake is corrected with a credit or debit note that refers to it, or with a credit note and then a new invoice.
What if a standard invoice is rejected at clearance?
It isn’t shared with the buyer and isn’t a valid invoice; you fix what caused the rejection and issue a new invoice for clearance.
Is VAT different on packages sold to agents abroad?
That’s a question for your tax adviser and ZATCA’s guidance; it depends on the nature of the service and who benefits from it and where, and this guide doesn’t decide it.
Sources
This guide is general information. The rules and dates are the named authorities’ to set, so check their own pages before acting.
