The Zakat, Tax and Customs Authority (ZATCA) has implemented the provisions of e-Invoicing, effective from 4th December 2021. The taxpayers, currently registered under VAT in Saudi Arabia, are required to comply with them. This article attempts to highlight the regulations around data storage and archival requirements under these new provisions.
Data storage and archival, in general, relates to the storage of documents and information so that they can be used for reference in future. In terms of e-invoicing, it refers to the storage of e-invoices and their associated notes. The taxpayers are required to store such invoices to comply with the requirements set forth under the new e-Invoicing regulations implemented by ZATCA.
It is pertinent to ensure proper storage and archival of generated e-invoices as it helps in future reference in case of any disputes and litigations.
The ZATCA has formulated detailed requirements for record-keeping electronic invoices and their associated notes under its regulations and implementation guides. Let us look at them in detail:
Taxpayers, subject to the e-invoicing regulation, might also be subject to ZATCA tax audit. In such cases, the ZATCA may appoint its auditors, and the taxpayers are required to cooperate with them by providing unrestricted access to the e-invoicing data.
This will enable the auditors to verify the compliances that the taxpayers must abide by, as mentioned in VAT legislation and e-invoicing regulations. Thus, taxpayers should ensure that the e-invoicing data was stored correctly and archived; otherwise, it may invite serious implications, especially during tax audits by the ZATCA.
The taxpayers may face serious challenges and issues, especially in the initial days of implementation. Some of the common issues faced by taxpayers are as follows:
One solution for the above problem is finding a third-party service provider to manage the taxpayer’s data storage and archival process. However, even after outsourcing the invoice generation process to a third party, the taxpayer will remain responsible for any breaches and non-compliances.