The Kingdom of Saudi Arabia (KSA) implemented phase 1 of e-invoicing through Zakat, Tax and Customs Authority (ZATCA) w.e.f 4th December 2021. The first phase of the e-invoicing initiative covered all resident taxpayers and the customers or third-party persons issuing tax invoices on behalf of the resident taxable person. However, ZATCA excluded non-residents (for VAT purposes) from generating e-invoices.
Also, ZATCA plans to implement phase 2 of e-invoicing in waves. Accordingly, in June 2022, it notified the taxpayers with more than SAR 3 billion turnover in 2021 must implement phase 2 from 1st January 2023.
This article explains the landscape of large B2C retailers and the problems they could face while generating e-invoices. Also, it explains how large retail outlets can generate B2C e-invoices seamlessly.
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.
Usually, large retailers consist of multiple stores at multiple locations leading to a huge number of cash registers and billing counters. Under KSA e-invoicing, businesses need to issue B2C e-Invoices, which are called simplified tax invoices, to customers on the spot, which are then expected to be submitted to the Fatoora portal within 24 hours.
Unlike real-time clearance of B2B e-invoices, it is sufficient to report B2C e-invoices within 24 hours from the time of generation. However, considering the massive number of B2C e-invoices generated by large retailers, businesses must connect their store-level cash registers or billing systems with one or multiple central databases. This move allows all the B2C invoice data to be transferred in real-time and stored on a centralised database. After that, businesses can easily report and generate simplified e-invoices from the Fatoora portal.
It is important to identify the required number of e-Invoice Generating Solutions (EGS) units and onboard them as a prerequisite for generating the e-invoices. Businesses can do this while making the impact assessment of e-invoicing on their invoicing processes. This process will help in undisrupted e-invoice generation.
Retail outlets usually stock thousands of items, and inventory records come with a long list of items and details. Accordingly, the adopted e-invoice solution should seamlessly plug into the existing ERP or order management system.
Usually, the footfall for retail outlets will be high compared to other businesses. Hence, it is vital to generate e-invoices quickly to prevent queue build-up at billing counters. The e-Invoicing process should be smooth enough to provide a good experience to customers. Also, the business should focus on minimising external dependencies and adopt a scalable solution.
There can be outlets or stores located at remote locations where there would be no continuous internet connection or power supply. Hence, businesses should take additional precautions to ensure continuity while generating invoices and reporting the same on the Fatoora portal.
Businesses must generate simplified e-invoice with a QR code to comply with phase 2 of KSA e-invoicing. Below are the mandatory fields to be mentioned on a simplified e-invoice QR code:
ClearTax offers many curated benefits that will help you get 100% ZATCA compliant much ahead of the deadline. ClearTax e-invoicing software (Fatoora) comes with many smart features, as follows:
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