Zakat, Tax and Customs Authority (ZATCA), the e-invoicing implementing authority in Saudi Arabia (SA), announced that phase 2 of e-invoicing will begin on 1st January 2023. Also, ZATCA announced on 24th June 2022 that the first targeted taxpayer group includes the Value Added Tax (VAT) registered taxpayers whose revenue exceeded 3 billion SAR for the year ending 2021.
The applicable taxpayers shall start integrating ERP/accounting system and get ready for e-invoicing by 1st January 2023. While preparing for phase 2, you might get a few doubts, and this article provides a few FAQs and answers on Phase 2 of Saudi e-invoicing.
23rd December 2022
ZATCA announced that the businesses in KSA with greater than SAR 500 million turnover fall under the second targeted group under phase 2 of e-invoicing, and they must integrate their ERP/POS by 1st July 2023.
Phase II of e-invoicing in KSA will start from 1st January 2023.
ZATCA named the second phase of e-invoicing the integration phase. The applicable taxpayers must generate e-invoices or Fatoorah using compliant e-invoicing solutions as per the technical requirements and integrate with ZATCA’s system.
Phase II of KSA e-invoicing 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.
Phase 2 shall begin on 1st January 2023 for the first target taxpayer group. Also, ZATCA announced on 24th June 2022 that the first target group includes businesses that have revenue of more than SAR 3 billion during the calendar year 2021.
No, ZATCA will announce the targeted taxpayers group 6 months in advance of the implementation date. Accordingly, on 24th June 2022, ZATCA announced that the first targeted taxpayers group includes businesses having revenue of more than SAR 3 billion during the calendar year 2021. So, the applicable business shall integrate and get ready for phase 2 of e-invoicing by 1st January 2023.
ZATCA announced on 24th June 2022 that businesses with more than SAR 3 billion will start integrating with the fatoora portal. Phase II is applicable based on the revenue but not based on the industry.
The authority will implement phase 2 from 1st January 2023 in waves for targeted taxpayer groups. You must ensure that tech teams and service providers re-configure the e-invoicing solutions for a few more technical requirements in addition to phase 1. Further, such compliant e-invoicing solutions must be integrated with the system of ZATCA to generate e-invoices in a standard format.
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.
Yes, you can use the same e-invoicing solution that was used for phase 1, by updating the e-invoicing solution to comply with the phase 2 requirements.
Yes, you should continue following phase 1 requirements until phase 2 applies to you.
No, you are not required to implement phase 2 requirements until you are notified by ZATCA regarding the integration enforcement date.
You can access the Fatoora portal using Taxpayer Portal credentials (ERAD) and then follow the e-Invoice Generation Solution (EGS) onboarding process. Click here for more details on the Fatoora portal.
Once you’ve successfully onboarded the EGS, ZATCA will notify you, indicating whether the e-invoicing solution has been successfully integrated. Also, you can use the Fatoorah portal to view a summary list of all their integrated e-invoicing solutions.
ZATCA has notified the Fatoora portal for onboarding the EGS units. However, it has to announce the operating procedure for phase 2.
e-Invoices need to be uploaded with the ZATCA Platform in phase 2:
For Standard Tax invoices:
For Simplified Tax invoices:
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.
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.
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.
A tax invoice should include a sequential number which uniquely identifies it. The unique number generated from an e-invoice solution provider can be considered an invoice number if it fulfils the requirement of sequential numbers.
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.
ClearTax solution can be integrated with any in-house ERP or POS system. Please write to us at ME-Sales@ClearTax.in if you need further details.
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.
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 processes, such as printing invoices, presentment, reporting, auditing and VAT return filing. This will require significant process-wise change if your existing e-invoicing system is not ready for phase II. Both business and IT teams have to sit together and implement it.
B2B Invoices need to be cleared on a real-time basis, and B2C invoices can be reported within 24 hours from the time of generation. Each B2B e-invoice generated electronically must be cleared by the authority before sharing it with the buyers. Then only such B2B is considered as legal and valid.
Hence, you can integrate with ZATCA based on the transaction type. However, you must integrate them with ZATCA at the store level to report B2B invoices generated at 58 stores.
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.
ZATCA data dictionary can be downloaded from the below link:
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.
As per ZATCA e-Invoice Resolution document, the tax invoice should contain details of the VAT rate and VAT amount at the line item level.
As per the e-Invoicing Implementation standard document, an Invoice shall contain the buyer’s postal address. Also, you can find the national address details in the VAT registration certificate. Hence, you can’t issue a B2B invoice without a VAT registration number & national address. However, this requirement does not apply to simplified tax invoices and related CDNs.
It is to be noted that clearance applies only to B2B invoices. Hence, you should integrate your ERP/accounting system with ZATCA to get clearance for the B2B e-invoices. Once invoice data is shared, ZATCA will be validated that data, stamp the invoice and then return the XML file to you. Finally, you can share the invoice with truck drivers and with buyers.
ZATCA requires all invoice fields to be mandatorily in Arabic. Thus, the exchange can be only in Arabic or both English and Arabic.
ZATCA toolkit is not allowing invoices with zero values.
Yes, the ClearTax solution can help you comply with Phase I and Phase II. Please write to us at ME-Sales@ClearTax.in in case you need further details.
ClearTax solution can help you generate invoices in sequence and comply with ZATCA guidelines. Please write to us at ME-Sales@ClearTax.in in case you need further details.
The EGS units ot systems must comply with the ZATCA specifications. EGS providers must note those requirements, and taxpayers must ensure that tech teams and service providers comply.
The examples of e-invoicing systems include the following-
No. Any e-invoicing system or solution can be used to comply with the KSA e-Invoicing Regulations.
ClearTax servers are hosted in KSA. You don’t have to subscribe to any servers if you subscribe to Cleartax e-Invoicing Solution.
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.
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.
ClearTax solution can be integrated with any Point of Sale (POS) or ERP system. Please write to us at ME-Sales@ClearTax.in in case you need further details.
ClearTax solution can be integrated with any POS or ERP system. Please write to us at ME-Sales@ClearTax.in in case you need further details.
Yes, the ClearTax solution integrates with your existing ERP or POS solution. You can continue to use your existing systems. Please write to us at ME-Sales@ClearTax.in in case you need further details.
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 that prohibits a few functions, as mentioned in the ZATCA guidelines. It is clearly mentioned in guidelines that modification and cancellation of the invoice should not be allowed or done. Please connect with the ClearTax team by emailing us at MEfirstname.lastname@example.org for our experts’ complete guidance on understanding prohibitory functions.
You can connect with the ClearTax team by writing an email to MEemail@example.com. Our team will connect with you and guide you through the process of API Integration with SAP.
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