Last month, a client of mine had 2,000 units held by ZATCA in Saudi Arabia—because of non-compliant e-invoices. Fines plus demurrage fees cost him nearly 100,000 RMB. This is not an isolated case. Since June 2026, Saudi tax authorities have been systematically auditing cross-border sellers, especially those of us using overseas warehouses or direct shipping.
Honestly, many people think VAT registration alone keeps them safe. Wrong. ZATCA now cross-checks your customs clearance data with sales reports from e-commerce platforms. For example, if you declare a low value at customs but sell at a high price on Noon, the system flags it immediately.
From my experience, you must do three things now.
First, upgrade to Phase 2 e-invoicing. Saudi requires all B2B and some B2C transactions to generate XML invoices meeting ZATCA format. If your ERP or third-party tool doesn't support it, switch now. I've seen ordinary PDFs rejected outright.
Second, register for remote sales. If you ship directly to Saudi from an overseas warehouse (e.g., UAE) and annual sales exceed SAR 100,000, you must register for VAT in Saudi. Many think using FBN exempts them—but Noon automatically shares sales data with ZATCA. If you exceed the threshold without registration, you'll be retroactively taxed for the past 12 months plus a 25% penalty.
Third, keep complete logistics documents. During audits, ZATCA asks for invoices, bills of lading, customs declarations, and delivery receipts. You need to prove the goods actually entered Saudi and that the HS codes and descriptions match. I recommend saving an electronic file for every shipment, kept for at least five years.
In short, the era of competing on low price is over. Compliance costs will eat 10%-15% of your profit, but staying out of trouble saves the most money.
Guess what? I helped another client finish an audit last month—he followed these three steps beforehand. ZATCA only asked him to make up a small difference for three months, no fines. What about you? It's not too late to check now.