A proforma invoice is a document the seller sends before shipping, listing the goods, prices, Incoterms and payment terms so the buyer can pay an advance, open a letter of credit or apply for an import licence. Enter the seller, buyer and goods above and the proforma takes shape beside you, and VAT follows the Saudi rules: 15% on a domestic sale, zero on a qualifying export. When the goods are ready to ship, one button turns it into a commercial invoice where you add destination, packages and weights. Download it as a PDF for the buyer, in Word to add your logo, or in Excel with formulas.
What is a proforma invoice?
"Pro forma" means "as a matter of form": the document looks like an invoice but records no sale. It fixes what the seller will deliver and on what terms, and it carries a validity period after which the price lapses. Importers' banks open documentary credits against it, and many customs authorities ask for it with an import licence application. It is often misspelled "performa invoice"; the Latin is pro forma.
Proforma invoice vs commercial invoice vs tax invoice
| Proforma invoice | Commercial invoice | Tax invoice | |
|---|---|---|---|
| Issued | Before the sale and shipment | At shipment | On supply, as the regulations set |
| For | The buyer and its bank | Destination customs, the buyer, the carrier | The buyer; kept by the seller |
| Purpose | Fix the price, request payment, open an L/C | Customs clearance and duty assessment | Record the sale and VAT |
| Booked in the accounts | No | Does not replace the tax invoice | Yes |
| Fields of its own | Validity, payment terms | HS code, origin, packages, weights | VAT number, QR code, e-invoicing data |
A proforma never carries the words "tax invoice" or a QR code, and the generator prints on it that it is not a tax invoice. If you export while registered for VAT, issue the tax invoice for the sale from your e-invoicing system and use the commercial invoice as the shipping and customs document.
How the generator works out the invoice total
Each line is quantity × unit price, and the lines add up to the value of the goods. Under full details you can add freight and insurance when the Incoterm puts them on the seller, such as CFR or CIF. VAT then depends on the sale: 15% within Saudi Arabia, zero for an export that meets the zero-rating conditions, and none for an unregistered seller.
Total = Σ (Qty × Price) + Freight + Insurance + VAT
What a commercial invoice for export contains
Customs at destination assesses duty on the commercial invoice, so importers and customs brokers expect its details to match the bill of lading and the packing list exactly. The usual fields are:
- Exporter, importer and consignee: full names and addresses, plus the exporter's CR and VAT numbers.
- Description and HS code: a description precise enough to classify the goods, and the Harmonized System code. The first six digits are international; each country adds its own digits in its tariff.
- Country of origin: where the goods were made or produced, which drives duty rates and trade-agreement preferences.
- Value, currency and Incoterm: unit price, total, currency, and the Incoterm with its named port or place, such as FOB Jeddah Islamic Port.
- Packages and weights: number and type of packages, gross weight with packing and net weight of the goods alone.
- Declaration and signature: a statement that the details and origin are true, signed and stamped by the exporter.
Requirements differ by destination: some countries want chamber of commerce attestation, a separate certificate of origin or a specific language. Ask the importer or its customs broker what they need before you ship.
Incoterms on the invoice
The Incoterm decides who pays for transport and insurance and when the risk passes from seller to buyer. The generator prints it next to the total, and freight and insurance are added or left out to match it.
| Term | The seller pays up to | When it fits |
|---|---|---|
| EXW | Having the goods ready at its own warehouse | The buyer arranges all the transport |
| FOB | Loading on board the vessel at the port of shipment | Sea freight where the buyer picks the carrier |
| CFR | Sea freight to the port of destination | The seller books freight and the buyer insures |
| CIF | Sea freight and insurance to the port of destination | Asked for in many letters of credit |
| DAP | Delivery to the buyer's place, without import duties | Road and courier shipments |
| DDP | Delivery including import duties and taxes at destination | When the seller carries everything |
Proforma invoices and letters of credit
Under a documentary credit the buyer's bank opens the credit on the terms of your proforma and pays when you present matching documents: commercial invoice, bill of lading, packing list and certificate of origin. Write the description, quantities, Incoterm and ports on the proforma exactly as you want them in the credit, and ask the buyer for a copy of the credit before shipping so you can check it against your commercial invoice. A mismatch in the description, weight or port name between the documents and the credit can be enough for the bank to refuse them and hold the payment.
Zero-rated VAT on exports
Exports of goods from Saudi Arabia to outside the GCC are subject to VAT at zero percent, provided the exporter keeps evidence that the goods left the Kingdom, such as the customs declaration and transport documents, for the period set by the implementing regulations of the VAT law. Check the current text with ZATCA for the accepted documents and how long to keep them. A zero-rated supply is still reported in the VAT return, and the exporter can recover the VAT on its purchases.
Common mistakes
- Calling a proforma a "tax invoice", or booking it as revenue before the sale.
- A description or weight on the commercial invoice that does not match the bill of lading and packing list.
- An Incoterm without the named port or place, or without its edition (Incoterms 2020).
- A four-digit HS code, or one copied from similar goods that do not match yours.
- Adding 15% to an export invoice that meets the zero-rating conditions, or the reverse.
- Leaving out gross and net weight, which holds up clearance at destination.
What to do after issuing the invoice
Send the proforma to the buyer as a PDF and wait for the advance or the letter of credit. At shipment, press "Turn into a commercial invoice" so the same lines carry over, add the destination, packages, weights and ports, and check it against the bill of lading before sending. "Share as link" opens the generator with your data for a sales colleague or the customs broker to review.
When exports become a regular part of your sales
One or two invoices a month fit in a generator. When you export regularly and sell locally at the same time, the tax invoice and the commercial invoice need to come from the same data, and you need to know what has shipped and what each buyer has paid. At Microtec we offer accounting software (ERP) covering sales, purchasing, inventory, finance and HR, and our solutions are approved by the Zakat, Tax and Customs Authority. Run your next export order through it.