What is an electronic tax invoice, and what is its purpose?

ما هي الفاتورة الضريبية الإلكترونية

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A tax invoice is a commercial sales invoice for goods or services issued by companies and establishments as evidence of the process of selling the good or providing the service. This invoice is issued in electronic format, and the tax invoice mainly includes information related to the value-added tax for goods and services subject to this tax.

A tax invoice is a basic document for transactions between an enterprise and another establishment (B2B), between an enterprise and a consumer (B2C), or between an establishment and a government entity (B2G). Electronic invoicing aims to convert tax invoices from traditional paper invoices to electronic invoices that can be exchanged and processed in an organized and integrated electronic format between the seller and the buyer, and the Zakat, Tax, and Customs Authority does not approve copied or scanned paper invoices as electronic invoices.

Benefits of an Electronic Tax Invoice

There is no doubt that the electronic invoicing process for these tax invoices is very important, as it serves as a tool that organizes the process of issuing tax invoices in a unified manner to facilitate their sharing with the Zakat, Tax, and Customs Authority, and electronic tax invoices have many other benefits, such as the following:

Reduce costs

Companies and institutions consume a lot of costly resources in the traditional invoicing process, such as ink and paper costs to print invoices and the human resources that need to write these invoices and enter their data manually into the company’s electronic systems. Through digital transformation and the adoption of electronic tax invoices, companies are able to significantly reduce the costs of issuing tax invoices.

Reduce time

Due to the dependence of traditional tax invoices on human resources in creating and printing these invoices and entering their data manually, the slowdown that can occur at all stages of creating and issuing invoices cannot be avoided, which in turn hinders the completion of financial transactions in the company, so the adoption of electronic tax invoices in companies reduces time and speeds up the progress of operations.

Increased accuracy

The keenness of electronic invoicing programs on accuracy in the process of creating tax invoices is what makes them an attractive option for companies and institutions, as accurate and carefully studied electronic systems are relied on to create correct invoices free of any errors, and this helps to dispense with human intervention in creating invoices and thus avoiding human errors.

Improved account control and auditing

Tax invoices are used to document and record various financial transactions in the institution, which are relied upon in controlling accounts, and companies need to keep tax invoice records in order to verify compliance with tax laws and detect any possible error to reduce the risk of falling into tax violations. The electronic tax invoice is more efficient than traditional in achieving this, as electronic invoicing programs keep all important records accurately.

Electronic tax invoice types

All establishments and companies need to issue tax invoices when carrying out any sale of goods or provision of services, as many of these goods and services are subject to value-added tax, and therefore tax invoices must be created to contain all the details of the sale process and taxes imposed on the goods or services provided, as well as information related to the seller and buyer. There are two types of tax invoices according to the parties to the commercial process, which are the following:

Tax invoice

The tax invoice is the invoice that is issued from one establishment to another, and it contains many mandatory fields, including boxes that carry the information of the establishment that sells the commodity or provides the service, such as the name, address, commercial registration number, tax registration number, and information of the establishment that purchases these goods or services, such as the name, address, commercial registration number, and tax registration number as well.

Simplified Tax Invoice

A simplified tax invoice is an invoice that is issued from an establishment to a consumer individual, contains the main fields of the tax invoice, and includes information about the establishment or store that sells the item, along with information about the commodity itself.

What distinguishes an electronic tax invoice from a regular one?

In general, the traditional tax invoice does not differ significantly from the electronic one in terms of the contents and boxes of the invoice, as both are considered sales invoices that aim to document the sale process with the taxes imposed on this process. But what distinguishes electronic tax invoices are some points that can be summarized as follows:

Issuance method

The electronic tax invoice must be issued using a program that supports electronic invoicing, and the software or solution used must be compatible with the standards and requirements of the electronic invoicing regulation, which can be summarized as follows:

  • The program must be able to connect to the Internet.
  • The program supports the creation of a QR code and adding it to the invoice.
  • The program should be accurate and issue invoices with high efficiency, so that it includes all the requirements of the authority.
  • The software does not support features prohibited by the authority, such as unrestricted access, manipulation of generated electronic invoices or records, or the creation of more than one invoice sequence.

Formula

While the traditional tax invoice is written by hand or by text writing software, the electronic tax invoice is issued electronically through a program that supports electronic invoicing, and it is in XML format or PDF/A-3 format (with XML format included), and this formula was determined in the second phase of the application of electronic invoicing in Saudi Arabia with the aim of standardizing invoices to be later shared with the Zakat, Tax, and Customs Authority using the API for both approval and submission.

Mandatory boxes

The traditional tax invoice is similar to the electronic one in many boxes and elements, but the electronic tax invoice requires mandatory fields dedicated to its type as follows:

Tax invoice

The tax invoice for commercial operations shall be between one establishment and another establishment and must contain the following mandatory boxes:

  • Tax invoice address.
  • Serial number of the tax invoice.
  • Date and time of issuance of the invoice.
  • Invoice QR Code.
  • Seller information: including name, address, vendor tax registration number, and any additional vendor ID, such as CR number.
  • Buyer information, including name, address, commercial registration number, and tax registration number for the buyer.
  • Information about goods or services, such as name, unit price, subtotal without VAT, and total inclusive of VAT,.
  • Total (excluding VAT).
  • Value Added Tax (15%).
  • Total with tax (15%).

Simplified Tax Invoice

The simplified tax invoice shall be for commercial operations between an establishment and a consumer, and it contains the following mandatory boxes:

  • Simplified tax invoice address.
  • Serial number of the tax invoice.
  • The date of issuance of the invoice.
  • The name of the store.
  • Store address.
  • VAT registration number.
  • Information concerning goods or services, such as their name, quantity, unit price, VAT, price, or total amount inclusive of VAT,.
  • Total taxable amount.
  • Value Added Tax (15%).
  • Total with tax (15%).
  • Quick response (QR) code.

Easy issuance of an electronic tax invoice with restrictions

Qoyod is the best solution for electronic invoicing in Saudi Arabia because it is keen to facilitate and simplify the electronic invoicing process so that the billing process becomes an easy task that requires a few clicks on your smart device so that the electronic tax invoice that is compatible with all the requirements of the Zakat, Tax, and Customs Authority is ready in a few minutes and without any effort.

Qoyod seeks to achieve speed and efficiency at the same time, as it is keen to issue electronic invoices with high accuracy and distinct efficiency that highlights it from other billing programs in record time, and the Qoyod program seeks to ensure full compliance and avoid any penalties or fines resulting from errors in the validity and accuracy of your tax invoices, so that you can forget the anxiety associated with the billing process by joining Qoyod.

In conclusion…

No enterprise can carry out a commercial operation for goods or services subject to taxation without establishing an electronic tax bill that complies with the requirements set out in the Uniform Convention on Value Added Tax and the implementing regulation of the value-added tax system in Saudi Arabia. To facilitate this, e-filing programs must be adopted as an enterprise’s statutes.

Contact us today to find out all the advantages that the Qoyod accounting system offers you in terms of issuing an electronic tax invoice easily at any time and from anywhere using your smart device connected to the Internet. You can also enjoy a lot of accounting services provided by Qoyod that will facilitate your company’s financial operations.

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