e-Invoice in Saudi Arabia
The Zakat, Tax and Customs Authority (ZATCA) published the official e-invoice resolution for a nationwide mandate at the end of May 2021. Previously, a draft law was opened to public consultation in April. ZATCA introduced changes to the draft law and released this resolution considering the comments made by the business community.
Is e-invoicing in Saudi Arabia mandatory? Who is obliged ?
E-invoices will be mandatory in Saudi Arabia as of 4 December 2021. The resolution imposes KSA e-invoicing on resident taxpayers and third parties acting on behalf of them. All tax invoices (B2B invoices), simplified tax invoices (B2C invoices), and debit/credit notes are under scope.
How does the e-invoicing in KSA work?
When it is complete, the KSA e-invoicing system is expected to be a clearance model similar to India GST e-invoice model: Invoices in machine readable format – XML invoice or PDF invoice with XML embedded – will be cleared by the Tax Authority before presented to the final customer. E-invoicing Saudi Arabia regulation is divided into two phases:
- The first phase will comprise mandatory e-invoice generation and archiving as of 4 December 2021. E-invoice software in Saudi Arabia must be able to generate all the invoices and associated notes in electronic format. E-invoices must contain the mandatory fields defined by the tax authority and comply with all the business and validation rules. Tax invoices must contain the buyer’s VAT registration number (if registered). Finally, simplified tax invoices must include a QR code so that individuals can check the validity of an invoice by scanning from a mobile device.
- The second phase, integration with the ZATCA e-invoice portal and submission of e-invoices will begin on 1 January 2023. According to the resolution, the tax authority will gradually mandate integration for different groups of companies. The companies under obligation will be published not later than 6 months before the deadline. In the first wave specific taxpayers whose revenue is subject to VAT for the year of 2021 exceeding 3 Billion SAR. Threshold will be decreased and the scope will expand gradually.
- Scope of Fatoora implementation is expanding gradually. Threshold of the second wave announced officially by ZATCA and effective from July 2023. New threshold is subject to taxpayers whose revenue is subject to VAT for the year of 2021 exceeding 0.5 Billion SAR. ZATCA directly informs target companies at least six months before the deadline to integrate their electronic billing systems.
All the invoices issued shall be transmitted to the e-invoice portal within 24 hours after generation.
Taxpayers must apply certain security features on invoices such as cryptographic stamp (electronic signature), hash and UUID. In this phase, QR code will be mandatory also on B2B tax invoices.
How can SNI KSA e-invoicing solution help you?
- SNI solution can automatically create and send electronic invoices to the tax authority and trade partners. It exports e-invoices to a local storage for mandatory archiving.
- SNI solution can generate invoices in the required format by the tax authority.
SNI solution for SAP is an end-to-end solution: a single SAP add-on handles all major steps:
- Extraction of accounting and transaction data from SAP modules
- Data mapping and processing
- Integration and document exchange with the Tax Authority through SNI e-invoice connector or any connector chosen by the client