To start using an e-invoicing, you need to complete the e-invoicing phase -1 by December 4, 2021.Process of creating invoices in digital format so that they can be issued and stored electronically. The Zakat, Tax and Customs Authority (ZATCA) in the Kingdom of Saudi Arabia (KSA) has issued laws requiring enterprises
E-invoices for KSA VAT taxpayers will look similar to standard VAT tax invoices, but will be generated through a system. Please keep in mind that a paper invoice that has been duplicated or scanned is not deemed an e-invoice.
E-invoicing is a term that refers to financial transactions. Why is e-invoicing being implemented by the Saudi government?
Businesses can perform more efficiently and securely with e-invoicing. The true purpose of this change is Saudi government integrate your company’s data with the ZATCA system, making trading more friction less and accurate. The authorities may standardize how invoices are reported to the system by using a consistent, machine-readable structure, while also going to stay up to current on transactions posted to their portal. Printed record keeping and handwritten bills will be phased away, and because all invoices will be authenticated via the ZATCA site, fraudulent actions such as phoney invoices will be detectable.
Various types of e-invoices
E-invoice for taxation (Standard)
Tax e-invoices are provided for B2B and Business to Government transactions and are typically utilized by buyers to claim input VAT deduction. These invoices must be shared with buyers in the necessary format. Such invoices can only be distributed with buyers when they have been encryption keys stamped and cleared by ZATCA.
E-invoices have been enhanced.
At the point of sale, simplified e-invoices are issued for B2C transactions. The buyer will not be required to utilize such invoices for input VAT deduction. Issuing a current taxation invoice (B2C invoice), your e-invoicing system must create a QR code to go with the invoice. This is necessary for confirming your electronic invoicing. All you have to do now is send the streamlined e-invoices to your consumers. However, these bills must be notified to ZATCA within 24 hours of being issued.
In Saudi, how does the e-invoicing procedure work?
It’s essentially the same method, except it’s faster and more secure. E-invoicing isn’t that dissimilar to normal invoicing. Make a copy for the buyer. You must have submitted this invoice to ZATCA’s portal and had it validated before sending it to the buyer.
Keep the e-invoice in your system for future use. Moving to a cloud-based system with e-invoicing capabilities will simplify storage and verify compliance instantly.
Use a certified e-invoicing system, such as Axolon ERP, to generate the e-invoice with all of the required fields.
KSA’s e-invoicing regulations are divided into 2 phases
- In phase 1, from December 4, you must begin using an e-invoicing system that is internet-connected and ZATCA-compliant. The online cash register, e-invoicing software installed on your computer, or a cloud-based e-invoicing solution can all be used as an e-invoicing system. When producing an e-invoice, all aspects and mandatory fields of the tax invoice, such as the seller’s name and VAT registration number, the time the invoice has been issued, the VAT total, and the overall value of the invoice inclusive of VAT, must be included.
- From January 1, 2023, companies must integrate your e-invoicing solution with ZATCA’s system in order to send the created e-invoices to the portal for verification and validation. Because this phase will effect various persons at various times, ZATCA will notify you of the integration date at least 6 months before it concerns you. The second phase will also have additional technical requirements, therefore having a system that is already complying with ZATCA’s guidelines is ideal. Your system must be able to interface with external systems using APIs and generate a UUID, a digital signature, a sequential number that differentiates each e-invoice, a hash, and a cryptographic stamp. Your system should also have anti-tampering features.
Axolon ERP’s easy-to-integrate E-invoicing Software Simple, safe, and reasonably priced to connect e-invoicing. Axolon provide end-to-end technologies for all forms of e-invoicing requirements for ZATCA accordance and the software can link with the ZATCA system.
*Please note this information is provided as per our understanding on e- invoicing notification. For more information, please refer to government publications on e-invoicing