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e-Invoicing in KSA: Standard Tax Invoice Clearance and Simplified Invoice Reporting

Updated on :  

08 min read.

Switch to : اللغة العربية

e-Invoicing Regulations in Saudi Arabia (SA) specified that the applicable taxpayers have to follow the clearance and reporting processes. All e-invoices must pass through the Zakat, Tax and Customs Authority (ZATCA) portal from Phase II (integration) starting from 1st January 2023.

You have to do the clearance or reporting of electronic invoices and related Credit or Debit Notes (CDNs) based on the type of e-invoice. This article explains the clearance and reporting processes in detail so you’ll understand the requirements to be ensured before sharing e-invoices with buyers or customers. Otherwise, such e-invoices and related CDNs considered invalid under the law.

Clearance of Standard Tax e-Invoices

Clearance of e-invoices from the ZATCA is required for both the Business-to-Business (B2B) and Business-to-Government (B2G) transactions, also classified as standard tax invoices under VAT. It applies to standard tax invoices and related CDNs issued by taxpayers registered under VAT subject to the e-invoicing regulations.

The taxpayers must declare and get B2B and B2G invoices cleared from the ZATCA via the API integration. Such real-time transaction integration must be between the compliant e-Invoice Generation Solution (EGS) and the ZATCA’s system, mandatory in Phase II of KSA e-invoicing starting from 1st January 2023. One must note that the clearance process is not compulsory for invoices during the first phase of e-invoicing in KSA.

e-Invoices are then verified for the set criteria. The ZATCA will approve and stamp such validated e-invoices and returns the same to the taxpayer. The following table explains the clearance process of simplified e-invoices and related CDNs, starting from 1st January 2023-

StepNature of activityWhat do you need to do?
1Creating or generating an invoiceUse the EGS to generate an invoice in XML format.
2Sharing data with ZATCAShare invoice data with the ZATCA platform in real-time through API  integration before sharing the invoice with the customer.
Make sure to have a stable internet connection.
3Validation by ZATCA portalThe e-invoice portal validates, puts a stamp, adds the QR code, clears the e-invoices and intimates to the supplier.
4Sharing e-invoice with the buyerOnce you receive the validated XML and QR code from the ZATCA portal, you can share the e-invoice with your buyer.
5Storing e-invoicesLastly, you must store all e-invoices on the system or server for such a period specified by ZATCA for audit purposes.

The criteria looked into by the ZATCA to ‘clear’ e-invoices are listed below-

  • The e-invoice must satisfy controls and necessary details as per the format laid out in the e-Invoicing Regulations.
  • The e-invoice should comply with the conditions listed in Annexure (1) and Annexure (2) of the Resolution.
  • The e-invoice should adhere to the technical documentation relevant to the taxpayer and invoice type.

Reporting of Simplified e-Invoices

Reporting e-invoices to the ZATCA is mandatory for all the Business-to-Consumers (B2C) transactions, also classified as simplified invoices under VAT.

  • It is mandatory to report simplified e-invoices and related CDNs to the ZATCA’s e-invoice portal within 24 hours of its issuance. 
  • Such e-invoices must bear a cryptographic stamp as mentioned in the e-Invoicing Regulations. 
  • Such reporting of e-invoices must be done via integration directly with the ZATCA portal. 
  • It works as a near-real-time transaction system, i.e., it does not require immediate reporting to the ZATCA. 
  • The authority will verify it, acknowledge the simplified e-invoice and intimate the same to the supplier.
  • A compliant EGS must also be used for generating simplified e-invoices.

The following table explains the process of reporting B2C invoices and related CDNs, starting from 1st January 2023:

StepNature of activityWhat do you need to do?
1Creating or generating an invoiceUse the EGS to generate invoices in XML format.
2Sharing e-invoice with the buyerYou can share the e-invoice directly with the customer.
Make sure to place a QR code on the e-invoice so the customer can scan it and get the invoice details.
3Sharing data with ZATCAYou must report simplified e-invoice and related CDNs on the ZATCA portal within 24 hours of its issuance.
4Validation by ZATCA portalIf the invoice data is a complaint as per rules and is in a valid format, ZATCA will issue the acknowledgement validating the simplified e-invoices.
5Storing e-invoicesYou’ve to store all simplified e-invoices on the system or server for such a period specified by ZATCA for audit purposes.

Standard Tax Invoice Clearance vs Simplified Invoice Reporting

The following table lists the differences between the clearance and reporting processes under the KSA e-invoicing.

ParameterClearanceReporting
ApplicabilityB2B and B2G invoices(Standard tax e-invoices)B2C invoices(Simplified e-invoices)
Sharing invoice data with ZATCAYou must submit the data in real-time for clearance.You can report the data within 24 hours from the time of generation.
QR CodeZATCA generates a QR code while clearing the invoice.Your EGS must generate a QR code before sharing it with the buyer.
Invoice sharing with buyerYou must share the invoice data with ZATCA for clearance before sharing it with the buyerYou can directly share the invoice with the buyer and then report the same with ZATCA for validation.
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