ZATCA, earlier known as GAZT, which falls under the Saudi Arabian Ministry of Finance, has required all VAT registered B2B companies to use electronic invoicing. The article discusses e-invoicing in Saudi Arabia, ZATCA E-Invoicing Compliance, ZATCA approved e-invoicing, E-invoicing KSA invoicing, detailed guidelines for e-invoicing, and other topics.

Introduction:

In Saudi Arabia, electronic invoicing is the act of creating and saving electronic invoices. ZATCA-certified electronic invoicing allows businesses to process invoices, credit notes, and debit notes electronically. The exchange of information between buyers and sellers will be straightforward.

All VAT payers within Saudi Arabia can issue e-invoices for VAT. E-invoices are different from paper invoices. E-invoices are not modifiable . It is possible to create VAT-compliant credit or debit notes from your original invoice.

Invoicing electronically harmonizes business transactions, making sure that everything runs smoothly and is safe. Since, e-invoices are not modified, sales returns can be recorded by issuing credit notes .

For exports and domestic sales to Saudi Arabia, all enterprises can issue electronic invoices. However, there is no need to issue an e-invoices for:

Imports from Saudi Arabia
There is no VAT on these supplies
Relevant payments

Advantages of the ZATCA E-Invoicing system in Saudi Arabia:

Major benefits of ZATCA accepted electronic invoices are as follows:

Faster payment processes: Faster invoice distribution and a shorter time to pay will boost cash flow because of e-invoice processing.
Reduced Fraud Risk: E-invoicing encryption system minimizes the chance of fraud and forgery on documents. E-invoices are not paper invoices. These invoices come in PDF format with distinctive seals as well as certificates.
Lower costs: Businesses could save money on printing postage, storage, and costs by using electronic invoices. It is also possible to load electronic invoices directly into the company’s ERP system, thereby reducing costs.
Greater Efficiency: E-invoicing can bring more transparency and accountability on an organizational scale.

What is the purpose of E-Invoicing in Saudi Arabia?

Invoicing electronically in Saudi Arabia helps businesses work more efficiently and securely. This method aims to integrate the company’s data with ZATCA to improve the efficiency of trading by making it more transparent. Since, a standard machine readable format is used to create e-invoices. By using the ZATCA portal, it is possible to identify fraudulent activities after confirmation of e-invoices. In addition, this information assists tax authorities in decreasing the frequency of audits.

These are just a few benefits of electronic invoices for Saudi Arabia for buyers and sellers:

Businesses will be less likely to commit mistakes using a streamlined electronic invoice.
Real-time creation of tax refunds invoices.
High-level data protection.
Verified e-invoicing minimize the fraud. As a result, it helps to increase the competitiveness of your business and trade.

Who is Eligible For E-Invoicing in Saudi Arabia?

To Saudi Arabian taxpayers who are tax-payers, e-invoicing in Saudi Arabia is mandatory.

It is mandatory for tax payers that purchase goods or services valued at SAR1,000 or more, in addition they are subject to VAT rate.
It is also mandatory for tax payers who deal in zero-rated products or services. Thus, they must issue Simplified e-invoices for zero rated goods and services.
Exporters must issue the e-invoice regardless of customer status and sale amount.
An e-invoice will be issued for nominal supplies (less than SAR200), but the buyer will not be entitled to claim input VAT.
E-invoicing can be used by parties who make invoices on behalf of a Saudi Arabian resident taxpayer, as well as VAT taxpayers who reside in the country. In transactions that involve exempted supply like the domestic supply of services or goods exempted under VAT legislation and regulations, taxpayers don’t have to prepare e-invoices as well as electronic invoices. Non-resident taxpayers also are exempt from VAT’s e-invoicing obligation.

E-Invoicing from ZATCA Compliance Guidelines:

The requirements for e-invoicing will apply to any tax-exempt item or service that is VAT-exempt.
B2B and B2C or B2G transactions are subject to e-invoicing.
A printed copy will be provided separately.
All vat-registered businesses and those who issues invoices on behalf of tax payers are mandatory to issue e-invoices.
Arabic will be the primary language, however, translation in English is also allowed.

How will the E-Invoicing in KSA Process How Does It Work?

E-invoicing can be a safer and more effective way of billing. Each time you make a transaction, you need to follow each of the steps below:

To create an electronic invoice that includes all the required information, you need to utilize an electronic invoicing system that is compliant.
The buyer should be provided with the invoice. In addition, it should be sent to, and verified by ZATCA.
e-invoices will be saved into the system.
Storage of data will be more efficient when you switch to a cloud-based system to use e-invoicing functions.

The Saudi Arabian government has taken the first step in making electronic invoices available throughout the country. Every taxpayer must be using an electronic invoicing system that is compliant with the requirements for the generation as well as integration phase.

What should a taxpayer do Now?

Numerous systems are now offering electronic invoicing that meets the requirements of ZATCA/phase-1’s GAZT requirements. Absolute Solutions One of the best IT Company in Riyadh, Saudi Arabia, has developed a ZATCA Compliant e-invoicing software, that you should integrate into your business to get compliant.

Frequently Answered Questions:

What is the difference between December 4, 2021?

Electronic invoicing is the only method that is accepted to ensure compliance with regulations set by the government. As a result. there is no support for paper-based invoicing.

As per ZATCA’s regulations, the mandatory QR Code is to be included on invoices.

In the case of closed invoices, No manipulation or deletion is allowed.

Is there any specific template for compliance?

The authorities are yet to establish the exact guidelines for Phase 1. The invoice should be according to vat receipt and contain QR Code.

Can we add QR codes to inactive invoices or emails?

Only Closed invoices can have QR Codes. This is to ensure that only invoices with a final date have a QR code.

QR code scan will provide what information?

As per ZATCA’s suggestions scans of the QR code should yield the following details:

Name of seller
The number of VAT registration for the seller.
Invoice total amount including VAT
VAT total amount
Date and time of invoice

What is the deadline for phase 2?

January 2023 is the proposed date for phase 2 completion . We’ll keep you up to current on the latest developments from Phase 2.

What are the things that you will not be able to do starting on December 4, 2021?

Creation of Manual Invoices.
The creation of bills that do not conform to the requirements of the authorities.
Make use of a system that doesn’t meet the requirements of the authority’s E-Invoicing regulations.
After issuance of E-Invoices, erase the invoices.

The Bottom Line:

After the release of the final rules, the ZATCA will hold seminars to help industry professionals understand. Many details aren’t yet clear however, they are certain that the Saudi government has done a great task of clarifying the long-term goals of the e-invoicing system’s implementation as well as providing clear documents, as well as opportunities to input into the documents for each stage. We expect to receive the proper instructions shortly. But for now it is important that everyone should start implementing the ZATCA Compliant e-invoicing software Saudi Arabia. This will not only help them get compliant with ZATCA requirements, but will also save them from any penalties on non-compliance.