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

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08 min read.

Zakat, Tax and Customs Authority (ZATCA) of the Kingdom of Saudi Arabia (KSA) 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.

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

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.

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.
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