How to Comply with e-Invoicing in Saudi When Your ERP Doesn’t Allow Interaction With External Systems?

Zakat, Tax and Customs Authority (ZATCA) of the Saudi Arabia (SA) implemented phase 1 of e-invoicing w.e.f 4th December 2021. ZATCA included all resident taxpayers and third-party persons issuing invoices on behalf of the resident taxable person in phase 1 of KSA e-invoicing. However, it kept the non-resident businesses (for VAT purposes) out of the e-invoicing initiative.

As a next step, ZATCA intends to implement phase 2 of e-invoicing in waves from 1st January 2023. Accordingly, it notified that taxpayers with more than SAR 3 billion turnover in 2021 must implement phase 2 in the first wave. Also, it notified that VAT registered business having more than SAR 500 million and less than SAR 3 billion turnover fall under wave 2 under phase 2 w.e.f 1st July 2023.

This article explains how to generate e-invoices when your ERP doesn’t allow interaction with external systems.

Why does your ERP not allow interaction with external systems?

Unlike phase 1 of KSA e-invoicing, phase 2 requires businesses to integrate with ZATCA’s Fatoora portal to get clearance for B2B invoices and to report B2C invoices. Hence, you must integrate all your invoice-generating solutions, such as billing systems, PoS, ERP etc., with ZATCA to comply with phase 2 of Saudi e-invoicing.

However, in a few instances, you might not be able to integrate your ERP with ZATCA directly, as the ERP does not allow interaction with external systems. Below are a few instances: 

• When you are using a legacy ERP or an old ERP which does not have integration capabilities.
• When you have customised the ERP specific to your business model, and now it is either burdensome or an expensive approach to make changes to the system.
• When your organisation has strict security policies and internal controls over data sharing with external systems.

Does ZATCA provide any platform to generate e-Invoices?

e-Invoicing applicable businesses in KSA have to keep in mind that ZATCA doesn’t provide any platform to generate e-invoices. Currently, ZATCA is providing only APIs so businesses can integrate directly or through third-party solutions and comply with e-invoicing requirements. However, ZATCA might come up with its own e-invoicing solution in future to ease e-invoicing for small businesses.

How can ClearTax help when you can’t connect your ERP with external systems?

ClearTax can help you with multiple methods to get clearance for B2B e-invoices and report B2C invoices in KSA, even though your ERP cannot interact with external systems. You can opt for any of the below methods to comply with e-invoicing requirements:

• Export data from ERP in excel and upload it on the ClearTax web portal.
• Use web interface or UI forms to enter data to create e-invoice via ClearTax e-invoicing solution.
• Implement File Transfer Protocol (FTP) to transfer invoice data to ClearTax from your ERP.