This article explains what E-Invoicing is in Saudi Arabia, its types, and the phases of implementation under the requirements of ZATCA (Zakat, Tax and Customs Authority).
What is E-Invoicing
E-Invoicing enables sellers and buyers to exchange and process Invoices, Debit Notes, and Credit Notes in a structured electronic format. Documents are issued and stored through an electronic system that follows specific requirements.
- Handwritten or scanned Invoices are not considered electronic Invoices and do not meet the specifications and standards.
Responsible authority and mandatory date
ZATCA has mandated E-Invoicing starting December 4, 2021 for all taxpayers subject to VAT. The authority announced the regulations and core requirements in December 2020.
Objectives
- Raise the rate of tax compliance.
- Limit shadow economy transactions.
- Combat commercial concealment.
- Reduce human errors in calculating VAT.
Types of E-Invoices
Tax Invoice
Typically issued from one business to another (B2B), containing all the required items as per ZATCA requirements.
Simplified Tax Invoice
Typically issued from a business to an individual (B2C), containing the main elements of a simplified tax Invoice.
Phases of E-Invoicing implementation
Phase 1: Generation phase
Starts on December 4, 2021 for all VAT-registered taxpayers and persons issuing Invoices on their behalf. Generation is done through compliant E-Invoicing systems, with the Invoice containing all required elements.
Phase 2: Integration phase
Requires linking the taxpayer’s invoicing systems directly to ZATCA’s “Fatoora” platform, and sending Invoices and their notes for validation.
