Key Questions about E-Invoicing in Saudi Arabia

On December 4th, 2021, a new regulation regarding the issuance of invoices was enforced by Zakat, Tax and Customs Authority (ZATCA) for all enterprises in Saudi Arabia. According to the new regime, all taxpayers and any other parties issuing tax invoices on behalf of suppliers subject to VAT must be accomplished via a compliant electronic solution with additional fields included depending on the type of the transaction. This implementation of the electronic invoicing project consists of Two major Phases. For Saudi Arabian businesses to be ready for Phase 1, they should stop issuing manual invoices and find a reliable, compatible, and compliant electronic invoicing solution which should able to generate e-invoices with the required elements as well as QR codes and should be able to timestamp the e-invoice copies archived in the solution. Here are top six questions that have been asked regarding the e-invoicing procedure:

Are we open to using any software application or ERP system to meet e-invoicing criteria?

Unfortunately, not all of the systems that generate electronic invoices are compatible with ZATCA requirements. Taxpayers are strongly recommended to ensure that their e-invoicing solution provider complies with the e-invoicing requirements outlined by ZATCA. Alternatively, ZATCA has also published an official solution providers listing who have passed the qualification process and criteria. As long as the software complies with ZATCA requirements and regulations, it can be used;

Are e-invoices just mandatory towards public sector transactions (B2G) in Saudi Arabia? 

The new regulation impacts all resident taxpayers in the country and it applies to not only B2G transactions but also B2B and B2C transactions as well. It also concerns the third parties that issue invoices for taxpayers subject to VAT; 

Can non-Saudi Arabian companies still benefit from this mandate?

Implementation and in turn automation of invoicing transactions will be beneficial for foreign companies which are doing business with Saudi Arabian companies. The use of electronic invoicing reduces the time-consuming and burdensome task of paperwork and will contribute to the integrity and transparency of the company data;

Is there a requirement to process inbound e-Invoices?

At this stage, there has been no announcements in regards to processing inbound e-invoices. Taxpayers current core responsibility includes dealing with outgoing invoices. 

Is QR Code mandatory in all invoices?

According to ZATCA’s laws and regulations for e-Invoicing in Phase 1, e-Invoicing solution providers must be able to generate e-invoices with the required elements including QR codes. In Tax Invoices, QR code is optional as long as it has the VAT registration number of the buyer. However, QR code is mandatory in simplified tax invoices.

Can information in the QR code be changed as per requirements of the client?

ZATCA requires all enterprises to have a universal QR code in all of their invoices. Each invoice is required to include the following information: Seller Name; Date and Time; TRN Number; Invoice Total; VAT Amount; Removal of one of these or addition of any new information results in the incompatibility of the invoice with ZATCA requirements.

To learn how all-in-one e-invoicing solution can help you meet the standardization, schedule a complimentary demo of our system today.