ZATCA has announced the ﬁnal requirements for Implementing the Provisions of the E-Invoicing Regulation in Saudi Arabia. This Fatoorah endeavor will signiﬁcantly reduce VAT leakage, help to adapt to cashless economy, and reduce shadow economy. The transition process from paper-based to electronic invoices shall reduce fraud, and tax evasion. It means that Saudi Arabia will adopt international practice and increase compliance with tax obligations through the new e-invoicing regulations.
We welcome you to CSE. Based on your current business model, we are happy to give you options on complying with the ZATCA’s E-invoicing endeavour.
Electronic Invoicing is a digital process of exchanging – issuing and receiving – invoices in electronic forms between a buyer and a seller. Following the new ZA- TCA’s requirements all invoices have to be processed and stored in a structured electronic format through an electronic system, which includes all the requirements of a tax invoice. This means that suppliers will no longer be allowed to generate or store paper or PDF invoices.
The new regulation applies to B2G, B2B, and B2C transactions and will aﬀect all residents, taxable persons in Saudi Arabia. It will also aﬀect third parties issuing invoices on behalf of a taxpayer subject to VAT.
E- Invoices are broadly classified as:
E-Invoicing implementation is planned in 2 main phases.
Phase – 1: (Generation Phase – start date 4th December 2021) focused on generation and archiving, will be eﬀective from December 4th, 2021. The suppliers are required to generate e-invoices (both tax invoices and simpliﬁed tax invoices) in the electronic and structured format. It is also required to store e-invoices electronically. Electronic invoices must include all mandatory ﬁelds in accordance with the VAT regulations in addition to the VAT identiﬁcation number of the buyer (if the buyer is a registered VAT taxpayer) and a QR code.
Points to consider for Phase – 1 Compliance:
Phase – 2: (Integration Phase – effective 1st January 2023) includes the transmission of e-invoices with the ZATCA system by using an application programming interface. All electronic invoices have to be generated in XML or PDF/A-3 format. Additionally, the suppliers’ e-invoicing software is required to be able to generate a universally unique identiﬁer (UUID), cryptographic stamp, a hash, and a QR code.
Points to consider for Phase – 2 Compliance: