E-Invoicing in Saudi Arabia

The rolling out of the first phase of electronic invoicing in Saudi Arabia is now complete.

The new e-invoicing project, Fatoorah, commissioned by the Saudi Zakat, Tax and Customs Authority (ZATCA), came into effect on 4th December 2021.

With phase 1 now operational, Saudi Arabian suppliers and taxpayers can no longer issue or store paper or PDF invoices.

In this post, we look at what the electronic invoicing mandate in the Kingdom of Saudi Arabia (KSA) means for the private and public sectors, the possibilities it brings, and how Unimaze fits into the equation.

Here’s what you should know.

Why is the Government Introducing e-Invoicing in Saudi Arabia?

The electronic provisions in the KSA aim to optimize financial workflows and improve accounting efficiency.

The goal is to integrate your business data with the ZATCA system to increase efficiency and transparency.

Further, electronic invoicing will allow the government to standardize how businesses report invoices to the system using a standard, machine-readable format while staying up to date with the transactions published to the ZATCA portal.

The introduction of electronic invoicing in Saudi Arabia will phase out the issuance and storage of paper invoices. All the invoices will be authenticated on the ZATCA portal, making it easy to detect fraudulent transactions.

In addition, e-invoicing enables the creation of a common database for audits. With the readily available data, the KSA tax authority will no longer need to conduct audits as regularly as before.

Other benefits of the electronic invoicing mandate for taxpayers include the following:

• An improved experience for buyers and sellers. Because you will issue electronic invoices in real-time, your input tax credits will be processed faster.
• Electronic data is more secure and less susceptible to errors than manual entries. A seamless system to validate invoices will reduce fraud and, by extension, encourage healthy competition and improve trade.
• A streamlined e-invoicing process minimizes miscalculations and inconveniences for business owners. Further, e-invoices reduce the accounting workload and allow you to get paid faster. Besides, you retrieve archived invoices easily when you’ve stored them in a digital format.

Who is Affected by the e-Invoicing Regulations in Saudi Arabia?

E-invoices are mandatory for all taxpayers. It also covers all Business-to-Government (B2G), Business-to-Business(B2G), and Business-to-Consumer (B2C) transactions.

There are a few exemptions, though. These include:

• Exempt supplies
• Reverse charge suppliers
• Advanced payment tied to exempt supplies
• Import of goods

Other e-Invoicing Provisions in the KSA are as Follows:

• The mandatory e-invoicing regulations apply to all taxable goods and services subject to Value Added Tax (VAT).
• You must implement the e-invoicing system if you’re a VAT-registered business owner in Saudi Arabia trading in and outside the country.
• You’ll have to implement e-invoicing if you are a 3rd in Saudi Arabia issuing a tax invoice on behalf of a taxable individual. For example, an accounting firm is issuing an electronic invoice at the behest of a textile trader.
• The invoices have to be in Arabic. However you can translate them to suit your business needs, but it’s obligatory to issue e-invoices in Arabic.

Types of e-Invoices in Saudi Arabia

There are two types of e- Invoices in the KSA: tax e-invoices (standard invoices) and simplified invoices, as explained below.

Tax e-Invoices

A tax invoice is issued for B2G and B2B transactions. These invoices claim input VAT deduction by the buyer.

You must share these tax invoices with buyers in the required format. When Phase 2 rolls out, you can only share e-invoices with buyers after ZATCA cryptographically stamps and clears them.

For VAT-registered buyers, you must add their VAT registration number on the invoice. You can also include a QR code.

Simplified e-Invoices

You will issue simplified e-Invoices at the point of sale for B2C transactions. Businesses issuing simplified tax invoices must use an e-invoicing solution that can generate a QR code with the invoice. The code is crucial for validating your e-invoices.

In Phase 1, all you need to do is to share the simplified e-invoice with your customer. In Phase 2, however, you must report these e-invoices to ZATCA within 24 hours of issuing them.

How to Get Started with e-Invoicing in Saudi Arabia

To start issuing e-invoices, you’ll need a ZATCA-compliant e-invoicing system that can connect to the internet.

The system can be e-invoicing software installed integrated with your ERP or a cloud-based e-invoicing solution.

The system must allow you to include all the mandatory tax fields of the invoice, including:

• The seller’s name
• The VAT registration number
• The time the invoice is being issued
• The VAT totals
• The overall value of the invoice, inclusive of the VAT

In Phase 2, your e-invoicing system must be able to do the following:

• Issue electronic invoices in specific formats like XML or PDF with embedded XML
• Connect to external systems with APIs
• Generate a Universally Unique Identifier (UUID)
• Create a digital signature
• Generate a sequential number to differentiate invoices, a cryptographic stamp, and a hash

Achieve ZATCA e-Invoicing Compliance with Unimaze

Suppose you’re bound by the electronic invoicing regulations in Saudi Arabia to issue and receive e-invoices. In that case, the first step is to partner with an experienced and reputable e-invoicing provider.

You want to deal with an e-invoicing provider that can simplify the onboarding process by taking care of compliance while allowing you to keep up with changes in the provisions automatically.

Unimaze’s ZATCA-certified e-invoicing solution complies with regulatory provisions in Saudi Arabia for content, reporting, format, clearance, and e-signature.

Our cloud-based e-invoicing software can generate QR code, hash chain, UUID, and archiving while enabling you to streamline AR and AP processes for maximum efficiency.

We ensure the secure exchange of all your e-invoices and e-documents per Saudi Arabia’s data and cloud computing laws.

Do You Have to Change Your ERP System to Use Unimaze’s e-Invoicing Solution?

No, you can use any ERP system. Our electronic invoicing solution integrates into various ERP systems and account software, including XERO, Uniconta, SAP, Microsoft Dynamics, Business Central, Concord, and Navision.

You only need to ensure that the system complies with Saudi Arabia’s regulations regarding VAT, cyber security, e-invoicing, cloud computing, etc.

Check if your ERP system can do the following:

• Create an e-invoice data set
• Deliver content in Arabic
• Allow the creation of a technical interface for communication.

If it can, you can start streamlining your invoice flow with Unimaze immediately. If it can’t, you can use the Unimaze Digitizer to convert manual invoices and documents into electronic invoices.