Important Terms in KSA e-Invoicing

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  1. Electronic Invoicing: It generates invoices and their related notes in an organised electronic manner. The exchange and processing of invoices between the seller and the buyer happen in an integrated electronic format through an electronic invoice generation utility.
  2. eInvoice: It is an electronic format of the paper invoice issued by a seller to a buyer to purchase certain goods and services. An invoice that is converted into an electronic format through the medium of scanning, copying or any other such method shall not be construed as an e-invoice.
  3. Simplified eInvoice: It is a kind of e-invoice generated only in the case of B2C transactions and does not contain the buyer’s details like name, address, and contact number. As an exception, if such invoices are generated by private and medical institutions, wherein the supply is treated as zero-rated, the buyer’s details shall be included mandatorily.
  4. Electronic Note: The electronic version of credit and debit notes, similar to an e-invoice issued by a seller to a buyer, is called an electronic note.
  5. Debit Note: Debit notes are issued if under-invoicing an original Value Added Tax (VAT) invoice. It has a format the same as an e-invoice, and in case of a simplified e-invoice, a debit note with a similar format will be issued for correction.
  6. Credit Note: A credit note is issued in case of over-invoicing in an original VAT invoice. Credit notes also follow the same format of the invoice issued upon.
  7. e-Invoice Solution: It is a software/solution used for generating e-invoices. Such a solution should strictly comply with the Provisions of e-Invoicing Regulations.
  8. eInvoice Solution Unit: It is a component of the e-invoice solution used by a particular unit of a group entity subject to e-invoicing regulations. Each unit is required to have its unique cryptographic stamp.
  9. eInvoicing Integration Portal: Under Phase 2 of e-Invoicing Regulations, starting from January 2023, the taxpayers are required to upload e-invoices on Zakat and Tax Authority’s (ZATCA) portal. ZATCA portal is called the e-Invoicing Integration Portal.
  10. Cryptographic Stamp: It is a mandatory component for every e-invoice created via cryptographic algorithms to ensure the authenticity of origin and integrity of the content in e-invoices and their related notes.
  11. Cryptographic Stamp Identifier: It is a unique identifier that helps a third party confirm the seller’s identity, who has issued the e-invoice, through the cryptographic stamp present on such e-invoice.
  12. UUID: Universally Unique Identifier (UUID) is a 128-bit number used by an e-invoice solution to create a unique identification number for each e-invoice. The UUID on the e-invoice is not visible on the physical invoice.
  13. QR Code: It is a type of matrix barcode with a pattern of black and white squares that are machine-readable and are used for the basic validation of e-invoices.
  14. Hash: It is a digital fingerprint for invoice data generated via a standardised algorithm and for each change in the data of e-invoice. Every time a new hash is generated to validate the same.
  15. Invoice Reference Number: It is a unique reference number for each e-invoice generated by the e-invoice solution.
  16. Clearance: It is a process through which ZATCA assures those e-invoices generated and integrated through their portal comply with e-Invoicing Regulations and their Annexures.
  17. Reporting of simplified e-invoices and their associated notes: It is a process by which persons, subject to e-Invoicing Regulations, share the e-invoices with ZATCA authority via their integration portal within 24 hours of generation.
  18. Invoicing Solution Provider: These are third parties that develop and sell e-invoice solutions for use by sellers.
  19. Human Readable Format: It is a format of e-invoice that humans can read.
  20. The Authority’s Toolkit: It is a toolkit or checklist provided by ZATCA to enable sellers to use an e-invoice solution to verify whether the same complies with ZATCA’s requirements or not.
  21. Business-to-Business (B2B): It is a terminology used to signify trade between two business entities who buy/sell goods and services in the course of their business.
  22. Business-to-Consumer (B2C): It is a terminology used to signify transactions between a business entity and a final consumer.
  23. Business to Government (B2G): It is a terminology used to refer to transactions wherein goods or services are supplied to a government entity by a business entity.
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