E-Invoicing Saudi Arabia
E-invoicing FAQ, VAT accounting software approved by ZATCA (Formerly GAZT)
E-invoicing (FATOORAH) applies to all persons subject to VAT and any other parties issuing tax invoices on behalf of suppliers subject to VAT. It will be implemented in two phases: Phase 1 is enforceable as of December 4, 2021 for all Persons subject to the E-Invoicing Regulation. Phase 2, known as the “Integration phase” and enforceable starting from January 1, 2023 and implemented in waves by targeted tax- payer groups.
Here are details of the E-Invoicing directive in simple Q&A format.
For tax invoices and their associated notes (usually issued for B2B transactions), an optional QR code and mandatory VAT number of the buyer if the buyer is a registered VAT taxpayer.
There is no specific file format mandated for Phase 1, however, invoices must include the mandatory fields and must be issued from an electronic system meeting ZATCA’s requirements. In addition, electronic copies of all issued invoices must be stored by the taxpayer.
QR code is not provided by ZATCA and shall be generated by the electronic sys- tem. Please approach your solution provider or technical teams to acquire or upgrade to a compliant electronic systems.
-Seller’s name
-VAT registration number of the seller
-Time stamp of the Electronic Invoice or Credit/Debit Note (date and time)
-VAT total
-Electronic Invoice or Credit/Debit Note total (with VAT)
-Anonymous Access.
-Absence of user session management.
2. Tampering of e-invoices or their associated notes or logs.
3. Multiple Electronic Invoice sequences.
Phase 2 known as the “Integration phase”, during this phase, subjective taxpayers must comply with E-invoicing (FATOORAH) Phase 2 business and technical requirements for the electronic invoices and electronic systems, and the integration with ZATCA’s system.
Due to the technical nature of the requirements, it is recommended for taxpayers to approach a solution provider or your internal technical teams to ensure your electronic systems are compliant with ZA- TCA requirements. In addition, developers and subject matter experts may visit ZAT- CA’s website for viewing all requirements (business, technical, security, etc.).
Further details on the integration mechanisms and specifications will be published by ZATCA on the developer page on ZAT- CA’s website.
Such electronic systems must comply with the specifications published by ZATCA.
Please also note that e-invoices are not required for the following transactions:
1. Exempt supplies Import of goods
2. Supplies subject to reverse charge mechanism
Here are details of the E-Invoicing directive in simple Q&A format.
What does an e-invoice look like and how is it different from current invoices?
E-invoices for Phase 1 (December 4, 2021) are similar to current tax invoices, with minimum additional fields: For simplified tax invoices and their associated notes (usually issued for B2C transactions) a mandatory QR code.For tax invoices and their associated notes (usually issued for B2B transactions), an optional QR code and mandatory VAT number of the buyer if the buyer is a registered VAT taxpayer.
There is no specific file format mandated for Phase 1, however, invoices must include the mandatory fields and must be issued from an electronic system meeting ZATCA’s requirements. In addition, electronic copies of all issued invoices must be stored by the taxpayer.
Does my solution need to be constantly connected to the internet and do I need to integrate my solution with ZATCA systems on December 4, 2021?
No, integration with ZATCA is not required for Phase 1 starting December 4, 2021Does my solution need to be able to generate QR codes on invoices on December 4, 2021?
Yes, QR code are mandatory for simplified tax invoices (usually issued for B2C transactions) and optionally for tax invoices (usually issued for B2B transactions).QR code is not provided by ZATCA and shall be generated by the electronic sys- tem. Please approach your solution provider or technical teams to acquire or upgrade to a compliant electronic systems.
What are the minimum requirements that must be shown after scanning a QR Code?
As part of Phase 1 (Generation Phase), the below fields are the minimum required fields that must be shown after scanning a QR code in a simplified tax invoice:-Seller’s name
-VAT registration number of the seller
-Time stamp of the Electronic Invoice or Credit/Debit Note (date and time)
-VAT total
-Electronic Invoice or Credit/Debit Note total (with VAT)
Do my e-invoices need to be approved by ZATCA before sharing them with the buyer, or reported to ZATCA after issuing them?
No, for Phase 1 (December 4, 2021), tax- payers are not required to approve, clear or report invoices to ZATCA.What are some of the prohibited functionalities for Phase 1 (Generation Phase) that are not allowed to be part of the E-invoicing system?
1. Lack of user management capabilities (uncontrolled access) for example:-Anonymous Access.
-Absence of user session management.
2. Tampering of e-invoices or their associated notes or logs.
3. Multiple Electronic Invoice sequences.
Should my electronic system be certified by ZATCA or a 3rd party for Phase 1?
No, and ZATCA may enforce such requirement at a later stage.What is Phase 2 (Integration Phase)? When will it be enforced and to whom does it apply?
Phase 2 known as the “Integration phase”, during this phase, subjective taxpayers must comply with E-invoicing (FATOORAH) Phase 2 business and technical requirements for the electronic invoices and electronic systems, and the integration with ZATCA’s system.Phase 2 known as the “Integration phase”, during this phase, subjective taxpayers must comply with E-invoicing (FATOORAH) Phase 2 business and technical requirements for the electronic invoices and electronic systems, and the integration with ZATCA’s system.
How do I know about my Phase 2 wave?
The enforcement date for the first target group will not be earlier than January 1, 2023. And ZATCA will notify taxpayers of their Phase 2 wave at least six months in advance.What are the requirements for Phase 2 (Integration Phase)?
Phase 2, which will be implemented in waves by target taxpayer groups’ starting from January 1, 2023, entails addition- al technical requirements that e-invoicing electronic systems must comply with, the integration of taxpayer electronic systems with ZATCA and the issuance of electronic invoices in a specific format.Due to the technical nature of the requirements, it is recommended for taxpayers to approach a solution provider or your internal technical teams to ensure your electronic systems are compliant with ZA- TCA requirements. In addition, developers and subject matter experts may visit ZAT- CA’s website for viewing all requirements (business, technical, security, etc.).
Further details on the integration mechanisms and specifications will be published by ZATCA on the developer page on ZAT- CA’s website.
What are some examples of e-invoicing systems?
Online cash registers, virtual cash registers on tablets, e-invoicing software installed on a computer, e-invoicing software in- stalled on phone or tablet and cloud- based solutions are examples of e-invoicing solutions.Such electronic systems must comply with the specifications published by ZATCA.
Please also note that e-invoices are not required for the following transactions:
1. Exempt supplies Import of goods
2. Supplies subject to reverse charge mechanism