E-invoicing is the process of creating invoices electronically in a digital format, so you can issue and store them.<\/p>\n\n\n\n
On December 4, 2021, the Kingdom of Saudi Arabia (KSA) mandated the use of e-invoicing for businesses across all three sectors (Zakat, Tax, and Customs Authority) in a phased-out approach. Using this method, businesses can issue and store their invoices electronically.<\/p>\n\n\n\n
Saudi Arabian taxpayers will generate their VAT tax invoices online, similar to the paper invoices that they currently receive. Electronic invoices do not include scanned invoices or paper copies.<\/p>\n\n\n\n
E-invoices are editable, after creation. You can however issue electronic notes in the form of credits and debits. These notes should relate to the original invoice. For example, if your buyer returns your product, you cannot alter the original invoice, but you can issue a credit note. It is essential that you use the same e-invoicing system for all invoicing and note-issuing activities. This will help to streamline and standardize the process of securely storing data.<\/p>\n\n\n\n
You must issue an invoice for sales made in the country, exports from KSA to other countries, and goods and services that you have received advanced payments for. There is no requirement to issue invoices for supplies exempt from VAT or associated payments, imports entering Saudi Arabia, or goods subject to the reverse charge mechanism.<\/p>\n\n\n\n
The reasons for the e-invoicing introduction are as follows:<\/p>\n\n\n\n
E-Invoicing has the following benefits for taxpayers:<\/p>\n\n\n\n
Following are some important guidelines for e-invoicing in Saudi Arabia:<\/p>\n\n\n\n
Tax e-invoices are generally used for the input VAT deduction in B2B and B2G transactions. For phase one, invoices should be shared with buyers via email in the required format. For phase two, however, invoices should only be shared with buyers after cryptographically signing, stamping, and clearing by ZATCA.<\/p>\n\n\n\n
Invoices for VAT-registered customers must include their VAT number. Invoices may also include QR codes.<\/p>\n\n\n\n
In the point of sale system, a simplified electronic invoice is generated, eliminating input VAT deduction. If you produce a simplified tax invoice (B2C invoice), your e-invoicing system must generate a QR code with the invoice. This is critical for validating your e-invoices.<\/p>\n\n\n\n
Phase 1 will involve e-mail notifications to customers. However, ZATCA requires all invoices reported within 24 hours of issuance in Phase 2.<\/p>\n\n\n\n
These e-invoices can also be self-billable (if approved by the tax authority) or billed by a third party. In the case of a self-billed e-invoice, the buyer is responsible for paying it, and you should prepare your taxes accordingly. An electronic marker identifies a third-party invoice or self-billing invoice.<\/p>\n\n\n\n
Receiving and sending invoices is pretty similar to a routine permission process. The difference is that electronic invoicing has more efficiency, less risk of fraud, and increases trust.<\/p>\n\n\n\n
The following are important steps for implementation:<\/p>\n\n\n\n
E-invoicing in Saudi Arabia does not have to be an issue for any business. However, there is a need to understand the ZATCA requirements for getting compliant with this mandate. As mentioned-above Phase 1 requires you to contact the best IT company Saudi Arabia<\/a>, and contact them for getting a reliable e-invoicing application or software.<\/p>\n\n\n\n