E-Invoicing Saudi Arabia – FAQs

Updated on :  

08 min read.

KSA e-Invoicing FAQs are easily understandable for all the relevant persons looking at implementing the e-invoicing system in Saudi Arabia. You can search for any FAQ on e-invoicing in this article and get the latest answers.

FAQs on Basics of KSA e-Invoicing

Is e-invoicing or Fatoorah compulsory for all in Saudi Arabia?

The e-invoicing or Fatoorah applies to VAT-registered residents of Saudi Arabia, including persons who issue tax invoices on behalf of VAT-registered persons. However, non-resident taxable persons are kept outside the scope of the e-invoicing system.

When will e-invoicing or Fatoorah become applicable in the KSA?

The e-invoicing system will be rolled out in two phases in the KSA, as follows:

Phase 1: Generation Phase – This phase applies from 4th December 2021 to 31st December 2022 to all the VAT registered residents and notified persons under the e-Invoicing Regulations. These notified persons should generate the e-invoices or Fatoorah from a compliant e-invoicing solution with specified fields.

Phase 2: Integration Phase – This phase begins from 1st January 2023 onwards and involves targeted taxpayer groups to integrate with the ZATCA’s system for clearance and reporting of e-invoices or Fatoorah in a transitional manner. It is in addition to requirements in phase 1. Additional fields will be specified for e-invoice for compliance. The system requirements and the integration date via API will be informed at least six months in advance.

To whom does e-invoicing or Fatoorah apply in the first phase, and when it was implemented?

The first phase is known as the generation phase. The taxpayers registered under the VAT law in Saudi Arabia and specified under the e-Invoicing Regulations must implement e-invoicing or Fatoorah. All electronic invoices and notes must be generated and stored using compliant electronic systems. ZATCA started the Phase I implementation on 4th December 2021.

How to prepare for e-invoicing or Fatoorah if some requirements are technical?

The technical requirements are required for the e-invoicing solution providers such as the ECR or software vendors to refer and develop systems. Alternatively, these technical requirements are for in-house tech teams who build internal solutions for the use of the business organisation. 

The taxpayers only have to approach such service providers or their IT teams to ensure the readiness of compliant e-invoice solutions before 4th December 2021.

What are the differences between e-invoices and invoices currently raised, including format?

The minimum additional fields will turn a standard invoice into an e-invoice. On the other hand, a simplified e-invoice used for Business-to-Consumers (B2C) transactions will compulsorily have a QR code and its associated debit and credit notes. Moreover, a tax invoice and related notes for Business-to-Business (B2B) transactions must contain the VAT number compulsorily, whereas the QR code is optional.

The laws and regulations prescribe no specific file format for the first phase. However, the e-invoices should be issued and stored on the electronic e-invoice system per ZATCA’s requirements.

What about invoices we prepare for exporting materials out of Saudi? Are those also subject to e-invoicing?

Export invoices must be generated as standard tax invoices, and e-invoicing is mandatory for such invoices.

What if we issue the samples to the customer? Do we need to issue the invoice?

Please refer to the definition of nominal supply below:

A nominal supply does not result from an actual supply of goods or services to another person but is instead deemed for VAT purposes to be a taxable supply – as a result of an event where a taxable person uses or provides goods or services in a certain way (for example, supplying goods or services for no consideration)

An e-Invoice must be generated for nominal supplies and retained with the business records for audit purposes. However, the taxable person receiving goods or services under a nominal supply arrangement (if any) will not be able to deduct input VAT related to that nominal supply. The e-Invoice should therefore not be provided to the customer. 

What is the concept of deemed invoice under KSA e-invoicing?

Nominal supply means deemed supply which means – A nominal supply does not result from an actual supply of goods or services to another person but is instead deemed for VAT purposes to be a taxable supply – as a result of an event where a taxable person uses or provides goods or services in a certain way (for example, supplying goods or services for no consideration)

In case of bad debt, will this be handled through a credit note?

Treatment of bad debt under e-invoice has not been defined by ZATCA Guidelines separately. We need to wait for further clarification from the ZATCA authority. 

Should VAT-registered individual taxpayers issue e-invoices?

Yes. As an exception, the e-invoicing system does not apply to non-resident taxable persons defined by the VAT law.

FAQs on Standard Tax Invoice vs Simplified Tax Invoice

What is the difference b/w the Standard Tax Invoice and the Simplified Tax Invoice?

A Standard Tax invoice is issued for most B2B and B2G transactions and is used for claiming input VAT deduction by buyers.

When should you issue a simplified e-invoice& a standard e-invoice?

Simplified e-invoices are issued for B2C transactions. The standard e-invoices must be issued when a buyer has the VAT registration number in the case of B2B and B2G transactions. However, the transactions related to exempt supplies, imports of goods, and supplies on which VAT is paid on a reverse charge basis do not require e-invoice generation.

Simplified Tax Invoices are issued for most instant B2C transactions. The buyer does not need to use the invoice for input VAT deduction. In Simplified Tax Invoice, Buyer details like Buyer Name, Address and VAT TIN are not mandatory. Line level discounts may not be provided in simplified Tax Invoices. However, in the case of Simplified Invoice issued to Private education and Private healthcare to citizen name would be required.

Suppose our business is purely B2C and customers place orders greater than 1000 SAR. Do we have to issue only Standard Invoices? 

Suppose you are issuing an invoice to a Non-taxable Natural Person (other than the export of goods). In that case, you can issue a simplified invoice. If you are issuing an invoice to a Non-Taxable Legal person, you may issue the Standard Tax Invoice.

FAQs on Phase I of KSA e-Invoicing

How will the billing practices of my organisation change from 4th December 2021?

The following are the changes from 4th December 2021:

  • Persons specified by the e-Invoicing Regulations must generate compliant e-invoices from compliant electronic systems.
  • Organisations cannot issue or use manual invoices.
  • The e-invoice or Fatoorah should have minimum additional fields.
  • The electronic system should be capable of generating QR codes, which were made compulsory.
  • The electronic system for e-invoicing must not support the prohibited functions as prescribed by the ZATCA.
  • Be aligned with e-invoicing system solution providers or internal tech teams.
  • Stay updated for any changes in rules and regulations by visiting the ZATCA’s website on business, security, technical, etc.
What are the mandatory requirements for phases 1 and 2 of the e-invoicing system or Fatoorah?

The first phase of e-invoicing in KSA requires taxpayers to use electronic solutions or systems to generate e-invoices or Fatoorah. With this, they should no longer issue manual invoices. Further, the first phase needs invoices to contain the buyer’s QR code and VAT number on tax invoices if such buyer is registered under the VAT law.

The QR code is not compulsory for standard e-invoices in the first phase, whereas it is compulsory for simplified e-invoices. In the first phase, generating invoices in XML, anti-tampering features, UUID, and integration with the ZATCA system is optional. The second phase makes all of the above features mandatory for taxpayers.

Is an internet connection required at all times for the e-invoice solution, and does it have to be integrated with the ZATCA system by 4th December 2021?

No. Integrating the e-invoice solution with the ZATCA system is not required on 4th December 2021. It is needed on or after 1st January 2023.

Should the e-invoice solution generate QR codes on invoices or Fatoorah from 4th December 2021?

The QR code is compulsory for simplified e-invoices for B2C transactions. At the same time, it is optional for standard e-invoices for B2B and B2G transactions. Such a QR code is generated by the e-invoice solution itself and not by the ZATCA system.

Hence, businesses must upgrade their existing invoicing solutions to accommodate the feature of generating and printing QR codes on e-invoices, starting from 4th December 2021.

During the first phase of e-invoicing in Saudi Arabia, which information must be displayed upon scanning a QR code on a simplified e-invoice?

Information to be displayed are the name of the seller, their VAT registration number, timestamp of electronic invoice or electronic credit note or debit note, total VAT amount, and the total invoice amount due.

Is approval from the ZATCA needed or reporting required before sharing the invoices with the buyer?

No. During the first phase, the taxpayers do not have to take approval, get clearance or report e-invoices to ZATCA.

Under phase 1 of the e-invoicing or Fatoorah system, what are the prohibited activities?

The following are the prohibited activities under phase 1:

  • Absence of user management capabilities or allowing uncontrolled access, such as accessing the system as anonymous, and lack of user session management.
  • Tampering of e-invoices and associated logs or notes.
  • Presence of multiple electronic invoice sequences.
During phase 1, should the e-invoicing solution or e-invoicing system be certified by the ZATCA or a third party?

No. ZATCA may enforce certification requirements for e-invoicing solutions at a later stage.

We are using SAP ECC 6.0, and the invoice is coming from Sales billing in PDF format; is it accepted during phase 1 and not required to change it to XML format.

The ZATCA authority has not mandated any specific format for Phase I. However, XML Format or PDF-A3 format with embedded XML has been mandated from Phase II.

Are bilingual invoices necessary or English invoices are enough during phase I of KSA e-invoicing?

Arabic is the primary language used in an invoice, and any other language can be used in addition. Using only the English language will not be in compliance with ZATCA guidelines.

What is the invoice format during phase I of KSA e-invoicing? Is it a text with one after another?

The ZATCA authority has not mandated any specific format for Phase I. However, XML Format or PDF-A3 format with embedded XML has been mandated from Phase II. 

Even though there is no specific format provided in Phase I, each Invoice and its associated Notes should contain all the mandatory fields as per VAT and ZATCA guidelines. Sample invoices have been provided by ZATCA in this document: https://zatca.gov.sa/en/E-Invoicing/Introduction/Guidelines/Documents/E-invoicing_Simplified%20GL.pdf.

What are the contents of a QR code during phase I of KSA e-invoicing?

QR Code is a matrix barcode with a pattern of black and white squares. It is machine-readable by a QR code scanner or the camera of smart devices to enable basic validation of electronic invoices and electronic notes.

QR Code must contain 5 mandatory fields as specified by ZATCA in Phase I. 

  1. ​​Seller’s Name
  2. VAT registration number of the seller
  3. Timestamp of the electronic invoice or credit/ debit note (date and time)
  4. Electronic invoice or credit/ debit note total (with VAT)
  5. VAT total
Does the description of goods have to be in Arabic or just the layout?

As per Article 53(5)(f) of the VAT Implementing Regulation, goods or service description is a mandatory requirement in the invoice; it should be in Arabic, which is a mandatory requirement. However, English can be used as a secondary language in addition to Arabic. 

Sample invoices have been provided by ZATCA in this document: https://zatca.gov.sa/en/E-Invoicing/Introduction/Guidelines/Documents/E-invoicing_Simplified%20GL.pdf.

Is it required to have XML format in the first phase?

As per ZATCA authority :

  • For the generation phase (4th December 2021), no specific format is required to generate and store the e-invoices.
  • After the go-live of the integration phase (Phase II), electronic invoices must be generated in a specific format with specific fields as per the Electronic Invoicing solution.
Is it required to store export invoices as well in Arabic?

The human-readable format can be presented if it is in Arabic (in addition to any other language). Arabic or Hindi numerals can be used (either of which will be considered as Arabic in the invoices). This means Arabic is a must, irrespective of the type of invoice.

How is the line-wise allowance calculated (Tax is applicable or Not)? How is the Document Level allowance calculated (Tax applicable or not)? How to handle Document Level discount?

Line level allowance is calculated when allowance is given at the line level items. Whereas document-level allowances are calculated at the overall document level.

E.g., if you are selling 10 different products with a price being SAR 100 for each one. For each line item, you gave a line-level allowance of SAR 10. Effectively the total amount is SAR 90 (SAR 90 – SAR 10) at each line and making the total for all 10 lines together SAR 900. You have to calculate VAT and the total amount (including VAT) on each line.

Now, if you provide an over and above discount of 10% at the invoice level hence invoice level Taxable amount (without VAT) would be SAR 810 [SAR 900 – SAR 90 (10%)]. On SAR 810, you have to calculate VAT and Total Amount (including VAT).

ZATCA is required to generate e-invoices for the advance received from Local customers. How would we adjust it later when the tax invoice is generated?

A tax invoice must be issued at the time of receiving an advance, and the same should be adjusted accordingly while raising the final e-invoice.

Should QR code be TLV base64 encoded or just TLV format?

For Electronic Tax Invoices, it is mandatory to generate and print QR codes encoded in Base64 format with up to 500 characters. It must contain the fields specified in the below table as per Annex (2) of the Controls, Requirements, Technical Specifications and Procedural Rules for Implementing the Provisions of the E-Invoicing Regulation.

  • The QR code fields shall be encoded in Tag-Length-Value (TLV) format with the tag values specified in the “Tag” column of the adjacent table.
  • The TLV encoding shall be as follows:
    • Tag: the tag value as mentioned above is stored in one byte [for tags 1 to 5]
    • Length: the length of the byte array resulted from the UTF8 encoding of the field value. The length shall be stored in one byte.
    • Value: the byte array results from the UTF8 encoding of the field value.

The following information should be present in QR Code during Phase I of KSA e-invoicing (from 4th December 2021):

  1. Seller’s name
  2. VAT registration number of the seller
  3. Timestamp of the invoice (date and time)
  4. Invoice total (with VAT)
  5. VAT total
Since the invoice cannot be cancelled, is it possible to modify it before issuing it to the client?

Invoice can neither be cancelled nor modified or deleted. Once the invoice is generated and if there is any issue, you would be required to issue either a Credit Note or Debit Note suitably.

Debit note and credit note should carry VAT amount?

Mandatory for the tax invoice and conditional for the simplified tax invoice. However, we suggest providing the VAT amount.

The Regulation prescribed naming the file for data storage/archive in the format as *VAT Registration (tax registration number)* + Timestamp (date and time at the point of invoice generation) + Invoice Reference Number. It does not specify if the seller or buyer’s tax registration number is to be mentioned in the file’s name. Is it a seller or buyer tax registration number?

Yes, it does not specify whether it is a seller or buyer Tax registration number. Still, as per our understanding, this is a Seller Tax registration number because both B2B and B2C invoices need to be stored.

Is Sequential Numbering for Invoice applicable for B2B Invoices as well?

Yes, Sequential numbering for invoices is applicable for B2B Invoices also. From 4th December 2021, sequential invoice numbering needs to be maintained irrespective of the underlying system. The ability to generate more than one Invoice sequence in one specific e-invoicing solution unit at any given time is barred by ZATCA and kept under prohibited functionalities.

Is it mandatory to have the Invoice numbering in sequence in Phase 1?

The ability to generate more than one Invoice sequence in one specific e-invoicing solution unit at any given time is barred by ZATCA and kept under prohibited functionalities. As per ZATCA detailed guidelines, “the e-Invoice Solution Unit” is defined as follows: 

  • “A component of an e-Invoice Solution used by the Persons subject to the e-Invoicing Regulations is assigned to a specific location and generates a continuous chain of linked e-Invoices and its associated Notes in an XML format. Each unit must have its own Cryptographic Stamp Identifier and stamp each invoice in its e-invoice and associated Note sequence. 
  • For example, a Unit can be a cash register that generates a single paper tape as a record of the invoices issued on it.”

It is recommended to follow the requirement from Phase I so that there is no issue with respect to ZATCA compliance.

We have different invoice series in multiple POS; how do we manage the sequence? Do we need to maintain one sequence at the entity level?

As per ZATCA detailed guidelines, “the e-Invoice Solution Unit” is defined as follows: 

  • A component of an e-Invoice Solution used by the Persons is subject to the e-Invoicing Regulations assigned to a specific location. It generates a continuous chain of linked e-Invoices and their associated Notes in an XML format. Each unit must have its own Cryptographic Stamp Identifier and stamp each invoice in its e-invoice and associated Note sequence. 
  • For example, a Unit can be a cash register that generates a single paper tape as a record of the invoices issued on it.
  • The solution unit must not generate more than one sequence so that all invoices generated by an e-Invoice Solution unit are linked using the “Previous Invoice Hash” value into a single chain. 
  • Suppose a taxpayer generates invoices in separate locations on separate units. In that case, each unit should generate a single invoice sequence. The units do not need to coordinate invoice creation to order the invoices in the sequence. 
  • A solution might, at times, generate invalid e-invoice or associated Note documents. Such documents should remain and not be deleted to preserve the continuity of the e-invoice document order.

The principle behind such a requirement is that the ZATCA authority mandates absolute transparency and clean invoice sequence generation. Hence, if you have multiple e-Invoice Solution units, each solution unit should generate a single invoice sequence.

If there are multiple businesses on Single VAT Registration. Should we need a single invoice sequence, or we can use multiple sequences with respect to each business?

Suppose a taxpayer generates invoices in separate locations on separate units. In that case, each unit should generate a single invoice sequence. The units do not need to coordinate invoice creation to order the invoices in the sequence.

Regarding the invoice serial. If the company has both B2C & B2B transactions, will they have the same serial No? It is okay to have each kind of revenue have its own serial No?.

The ZATCA authority has not provided specific guidance to provide different sequencing for B2B or B2C transactions. The mandatory requirement is to generate a single sequence number from each e-invoice solution unit.

We are moving to a new system. Should we keep the number sequence the same from old to new?

From 4th December 2021, sequential invoice numbering needs to be maintained irrespective of the underlying system. You can also start an afresh sequence from 4th December 2021 if the system or ERP allows for the same. 

What if there are sub-divisions in our ERP? Will we need a separate unique voucher number like civil, mechanical etc.?

The ZATCA authority has not provided any specific clarity based on the sub-division in the business and its link with the sequence. ZATCA has stressed more on Sequence numbers being maintained based on the e-Invoice Solution Unit. 

Suppose your ERP is a single e-invoicing solution unit. In that case, it is recommended to use a single sequence number across all subdivisions for all invoices and their associated notes. 

Do we need to send e-invoices to authority from phase 1?

No, e-invoices are not required to be sent to ZATCA in Phase I. Integration with the ZATCA Platform is required from Phase II. 

However, from 4th December 2021, your e-invoicing solution should be capable of retrieving historical invoices if requested by ZATCA.

Can we have different invoice sequencing for each branch location or division?

Sequencing is dependent on the e-invoice solution unit. If you have multiple e-invoice solution units, you can generate a sequence based on the e-invoice solution unit.

Can you share an Invoice Sequence as an example? We use the invoice sequence from 21000001 eight-digit invoice number with the year “21” being the prefix in all invoices.

The invoice number should be chronological, and the sequence should be maintained. If you use 21000001 and all subsequent invoices in the same sequence as 21000002, 21000003.

One ERP solution unit with different divisions (different legal entities in ERP) should have one sequence or a different sequence?

Sequencing is dependent on the e-invoice solution unit. If you have multiple e-invoice solution units, you can generate a sequence based on the e-invoice solution unit.

What about the breakage of sequence # with a new period or year?

As per the current e-invoice guidelines, there is nowhere mentioned that the Invoice sequence is allowed to break based on change of the year. Hence, as of now, to the best of our understanding, the sequence should not break and should continue irrespective of change in a year. We should wait for further guidelines &/or clarification from ZATCA in this regard.

Our invoices are generated from a global EMR system which means the invoices in KSA will not be in sequence at all. What would be the solution for this?

It would be better if you could map a specific sequence, especially for KSA, in your Global EMR system since sequencing is a must in KSA.

Is a timestamp necessary? My ERP is showing everything in QR Code except Invoice Issue Time. Still, it shows the Invoice Issue time in the activity log of ERP but not on the invoice itself.

All log entries of the e-invoice solution must be timestamped and linked by placing the hash of the previous invoice in the associated field of the next invoice in a sequence so that their order cannot be changed. Time is not mandatory on the face of the invoice; however, the same is required at the time of e-invoice generation.

FAQs on Phase II of KSA e-Invoicing

To whom does e-invoicing or Fatoorah apply in the second phase, and when will it be implemented?

The second phase is known as the integration phase. Subjective taxpayers have to generate e-invoices or Fatoorah using compliant e-invoicing solutions as per the technical requirements and integrate with ZATCA’s system. Phase 2 applies from 1st January 2023 to the targeted taxpayer groups in waves. These groups will be informed of the new system’s requirements at least six months before implementation.

How will one be informed about phase 2 of the e-Invoicing or Fatoorah?

Phase 2 shall begin on 1st January 2023 for the first target taxpayer group, who will be notified at least six months before implementation. 

What are the technical requirements defined for phase 2 of the e-invoicing system or Fatoorah?

The authority will implement phase 2 from 1st January 2023 in waves for targeted taxpayer groups. It needs the taxpayers to follow additional compliance requirements. They must ensure that tech teams and service providers re-configure the e-invoicing solutions for some additional technical requirements. Further, such compliant e-invoicing solutions must be integrated with the system of ZATCA to generate e-invoices in a standard format. 

Under phase 2 of the e-invoicing or Fatoorah system, what are the prohibited activities?

In addition to the prohibited activities given for phase 1, export of the stamping key and time change are also not allowed in phase 2.

If we have ERP and make a B2B invoice and save that invoice in PDF format in our system, does it mean we fulfil the archiving requirement?

Persons subject to the e-Invoicing Regulation may store their electronic invoices in a server on-premises in KSA or in the cloud as per their solution requirements and storage requirements and according to the provisions in VAT Law, VAT Implementing Regulation, e-Invoicing Regulation and resolutions and all other relevant Laws in KSA.

  • As per VAT Implementing Regulations, if the data is hosted on the cloud, it must be accessible through a direct link that can be made available to the authority. 
  • The solution must allow Persons subject to the e-Invoicing Regulation to export and save their invoices onto an external archival system.
  • Each stored invoice must follow a naming convention for the naming of the file: VAT Registration (tax registration number) + timestamp (date and time at the point of invoice generation) + Invoice Reference Number.
  • Taxpayer’s e-invoicing solutions may reside on the cloud following VAT Implementing Regulation. However, additional non-tax-related regulations may apply to the taxpayer entity, such as National Cybersecurity Authority published laws and any other applicable regulations or controls.
  • Please refer to 6.9 Data Storage and Archival in ZATCA Einvoicing Detailed Guidelines
When would Phase 2 of KSA e-Invoicing starts?

Phase II of e-invoicing in KSA will start from 1st January 2023.

Phase II will be implemented with 6-month notice. Does that mean we have time till 30th June 2023? Or If the guidelines come out on 22nd July, does that mean six months’ notice will come simultaneously?

ZATCA has not yet released the implementation timelines and process of implementation. If they release the guidelines by July 2022 and give a 6 months notice to comply with the requirement. In that case, the implementation has to be completed before Jan 2023.

For syncing the system with ZATCA, is there a portal to upload the invoices in? or it will be live between ZACA and the system?

The ZATCA authority will provide further details of operations in Phase II by June 2022. 

Is it compulsory to upload the invoices to the ZATCA each and every day?

e-invoices need to be uploaded with the ZATCA Platform in Phase II

For Standard Tax invoices:

  • Standard Tax Invoices and their associated notes must be uploaded to the ZATCA Platform on a real-time basis for clearance.
  • Upon successful clearance, ZATCA will provide a cryptographic stamp on a real-time basis. The e-invoicing solution has to generate a QR code (with specified fields by ZATCA) which would be inserted in the Standard Tax Invoice.
  • Only after successful clearance and valid QR code generation you would be able to share invoices with your customer. Hence, every Standard Tax invoice needs to be uploaded on ZATCA on a real-time basis.

For Simplified Tax invoices:

  • However, Simplified Tax Invoices and their associated Notes can be generated, printed and shared electronically through your e-invoicing solution (without ZATCA interaction). 
  • Such Simplified Tax Invoices and their associated Electronic Notes must be reported to the authority within 24 hours from its generation. 
  • Once uploaded to ZATCA, Simplified Electronic Invoices will be validated by ZATCA. An acknowledgement will be provided as the API response.
If the customer doesn’t share an Email or Mobile number, how do we share the invoice electronically with the customer?

Sharing the invoice electronically with customers via Email or mobile number is not a mandatory requirement. You can generate a print copy and share it with them. But the invoice needs to be stored in your system electronically.

Should my electronic system be certified by ZATCA for Phase I? Do the e-invoices need to be approved by ZATCA before sharing them with the buyer for Phase 1?

Integration with ZATCA is required in Phase II. However, in phase I, you need to ensure that all the requirements of the ZATCA are well-taken care of for the purpose of e-invoice generation

We have a Format inside our ERP system. If the e-invoice is generated in your solution, is it okay to keep it only in the archive?

Yes, you can use your existing e-invoicing solution to maintain Archival as per ZATCA Guidelines. If your e-invoicing solution is not compliant, you can contact us.

Our e-invoice solution provider generates its own Unique no. Will that be considered invoice No in filing returns?

A Tax Invoice should include a sequential number which uniquely identifies it. Unique No generated from an e-invoice solution provider can be considered invoice No if it fulfils the above requirement of Sequential numbers.

We have an in-house customised ERP for invoicing. Can Cleartax help us and guide us on how to integrate with ZATCA servers?

ClearTax solution can be integrated with any in-house ERP or POS system. Please reach out to us at ME-Sales@ClearTax.in if you need further details. 

We have existing Invoices that are non-compliant. Do we have an option to migrate/reissue them using the Cleartax software?

As per ZATCA Guidelines, e-invoices generated should not be deleted or altered by any user. The existing invoices can be cancelled by generating a Credit note and then generating it again through ClearTax software.

Is Phase-2 just a technical integration between our system and ZATCA, or does it require any business process-wise change?

Phase 2 is an Integration Phase. The applicable taxpayers must use e-invoicing solutions to integrate their systems with ZATCA’s system. Each invoice has to be approved by ZATCA. This will impact your entire invoice generating process on Printing invoices, Presentment, Reporting, Auditing and VAT filing. This will require significant process-wise change if your existing e-invoicing system is not Phase II ready. Both business and IT teams have to sit together and implement it.

We have 58 stores across the kingdom, and each store has a POS machine in them. All the sales data is pushed to the HO every hour. Should we integrate with ZATCA from the store itself or from the HO?.

Each e-invoice generated electronically must be cleared by the authority as a prerequisite for sharing them with the buyers. Such an electronic invoice must be regarded as legal and valid. Clearance is a real-time transaction integration model of e-invoices. After integration, the taxpayer directly sends the electronic invoice before sharing it with the buyer.

B2B Invoices need to be cleared on a real-time basis, and B2C invoices need to be reported within 24 hours. You should integrate with ZATCA as per the transaction type, either B2B or B2C.

If our ERP is integrated with ClearTax, should it be registered with ZATCA or is registration of ClearTax enough?

Registration with ZATCA is mandatory for Phase 2 is mandatory for any business. Cleartax will act as an e-invoice solution provider in the integration phase.

From where can we get the ZATCA data dictionary?

ZATCA data dictionary can be downloaded from the below link:

https://zatca.gov.sa/en/E-Invoicing/SystemsDevelopers/Pages/E-Invoice-specifications.aspx

How to generate tax invoices against advance payment flow?

A tax invoice needs to be created for the balance amount after adjusting advances. Also, a tax invoice should be created when receiving the advance payment.

Have you started integration with ZATCA for any industry?

Persons subject to the e-Invoicing Regulations will be informed of the integration procedures with the authority׳s and systems at least six months before the date set for integration with the target group or groups. We are yet to receive the documentation to start the integration with ZATCA.

On the invoice layout, is it mandatory to show the “vat rate %” and “vat value”, or just the vat rate % is enough against each line item?. This is due to space constraints on A4 size. The total vat value of the invoice is shown at the bottom of the invoice.

As per ZATCA e-Invoice Resolution document, Tax Invoice should contain details of VAT Rate and VAT amount at the line item level.

For a few B2B small scale customers, they do not provide us with their “national address & VAT registration number” even after several follow up. As per the clarification from another consultant, we were informed that “due to non-availability of complete national address, we can issue B2B e-invoices to such customers, till we get their national address”. Please clarify the exact requirement of ZATCA on fields to be filled for the customer’s address to comply with e-invoicing.

As per the e-Invoicing Implementation standard document, An Invoice shall contain the buyer’s postal address. This does not apply to simplified tax invoices, associated credit notes, and debit notes. National address details are available in the VAT Registration Certificate. 

It will be real-time permission from ZATCA for all invoices before giving them to customers. Usually, trucks leaving the plant will require an invoice. How do we provide them?

Each e-invoice generated electronically must be cleared by the authority as a prerequisite for sharing them with the buyers. Such an electronic invoice must be regarded as legal and valid. 

Clearance is a real-time transaction integration model of e-invoices. After integration, the taxpayer directly sends the electronic invoice before sharing it with the buyer.

Electronic invoices are then validated across several categories of varying levels. If approved, they are stamped by the authority and returned to the taxpayer.

The exchange of Phase II data with ZATCA will be in English only, or it will be bilingual?

ZATCA requires all invoice fields to be mandatorily in Arabic. Thus, the exchange can be only in Arabic or both English and Arabic.

Does ZATCA allow zero value invoices?

ZATCA toolkit is not allowing invoices with zero values.

How can we be sure that we are in line with Phase I and Phase II and that we will not support any penalties or problems? Can Cleartax check for us if we are in line with ZATCA rules?

Yes, the ClearTax solution can help you comply with Phase I and Phase II. Please reach out to us at ME-Sales@ClearTax.in in case you need further details. 

Our invoices are not being generated in sequence. How can we change the format of our invoice number now?

ClearTax solution can help you generate invoices in sequence and comply with ZATCA. Please reach out to us at ME-Sales@ClearTax.in in case you need further details.

FAQs on KSA e-Invoicing Solution

Can you give some examples of e-invoicing systems or e-invoicing solutions for use?

 The electronic systems or electronic e-invoicing solutions must comply with the specifications listed by the ZATCA. Solution or service providers must note those requirements, and taxpayers must ensure that tech teams and service providers comply.

Popular examples of e-invoicing systems include the following-

  • Cash registers are available either online on web browsers or virtually on tablets.
  • e-Invoicing software is either installed on computer systems, phones, tablets, or cloud-based.
Is it compulsory to use a cloud invoicing system for compliance with the e-Invoicing Regulations?

No. Any e-invoicing system or solution can be used to comply with the e-Invoicing Regulations of the KSA.

Archiving files can be saved on the ClearTax server. Do we have to subscribe to any server in KSA while subscribing to your solution?

ClearTax servers are hosted in KSA. You will not need to subscribe to any servers if you subscribe to Cleartax e-Invoicing Solution. 

Does ClearTax assess existing VAT system compliance with VAT as part of your solution, or is it separate?

VAT Assessment and VAT Compliance are not part of the current ClearTax e-Invoice Solution. However, we will launch such a product in a few months.

Are the ready solution from ClearTax can be integrated with SAP ECC 6.0?

Yes, We can integrate with SAP ECC 6.0. ClearTax solution can be integrated with any ERP or POS system. Please reach out to us at ME-Sales@ClearTax.in in case you need further details. 

Has ClearTax done integrations with JDE ERP?

ClearTax solution can be integrated with any ERP or POS system. Please reach out to us at ME-Sales@ClearTax.in in case you need further details. 

We are using Xero; Can ClearTax integrate with that?

ClearTax solution can be integrated with any ERP or POS system. Please reach out to us at ME-Sales@ClearTax.in in case you need further details. 

Can we continue using the current accounting software OR a software/ERP compatible with the ClearTax e-Invoicing Solution?

Yes, the ClearTax solution integrates with your existing ERP or POS solution. You can continue to use your existing systems. Please reach out to us at ME-Sales@ClearTax.in in case you need further details. 

My system is not ERP and is cloud-based and allows modifications and cancellation. Should I have an ERP system first and then integrate it with ClearTax? or just use the excel template you mentioned earlier?

You may start using the ClearTax Platform for e-invoice generation with ClearTax Excel templates for the interest of time. However, at the same time, you should have the right ERP which understands the prohibitory functions of the ZATCA. Modification and cancellation of the invoice should not be allowed or done. Please connect with the ClearTax team by emailing us at ME-sales@cleartax.in for our experts’ complete guidance on understanding prohibitory functions.

If we use SAP and how ClearTax will do the integration, which Integrator you are using to get data. Is it Views or API, and what is the customer’s need to be prepared?

You can connect with the ClearTax team by writing an email to ME-sales@cleartax.in. Our team will connect with you and guide you through the process of API Integration with SAP.

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