The Saudi Arabian government is implementing e-invoicing through Zakat, Tax and Customs Authority (ZATCA), in a phased manner. It implemented phase 1 w.e.f 4th December 2021 and phase 2 in waves w.e.f 1st January 2023. Further, ZATCA clarified that it classifies the taxpayers for phase 2 and notifies them six months before their wave. Accordingly, till now, it announced the following waves:
- Wave 1 under phase 2: Businesses registered under Saudi Value Added Tax (VAT) with more than 3 billion SAR turnover for the year ending 2021 fall under wave 2 w.e.f 1st January 2023.
- Wave 2 under phase 2: Taxpayers having turnover of more than SAR 500 million and less than SAR 3 billion in 2021 fall under wave 2 w.e.f 1st July 2023.
- Wave 3 under phase 2: VAT registered business in Saudi with more than SAR 250 million and less than SAR 500 million turnover in 2021 or 2022 fall under Wave 3 w.e.f 1st October 2023.
Hence, the applicable taxpayers shall integrate their ERP/POS with ZATCA on time to generate phase 2 compliant invoices.
How to integrate Microsoft Dynamics with ZATCA?
Microsoft Dynamics comes with inbuilt features to integrate with ZATCA. However, you must complete the below prerequisites:
- Get familiar with Saudi e-invoicing laws and regulations.
- Sign up for Regulatory Configuration Service (RCS) and set up e-invoicing.
- Establish integration between your finance app and e-invoicing service.
- Understand creating certificates and secrets in Azure Key Vault and set up the key vault.
- Configure virtual entities for Finance and Supply Chain Management (FSCM) in Microsoft Dataverse.
- Enable the Customer Payment Method Entity.
- Add the Dataverse endpoint as a connected application in the RCS instance.
- Import the Saudi Arabian ZATCA submission (SA) electronic invoicing feature into RCS.
It is to be noted that a few parameters of the Microsoft Dynamics e-invoicing feature are published with default values. Hence, you must review and update the default values according to their business operations before deploying the e-invoicing.
Further, you may follow the below steps to implement Saudi e-invoicing in Microsoft Dynamics:
- Create certificates and secrets for Cryptographic Stamp Identifiers (CSIDs).
- Add a record for the number sequence to count submitted electronic invoices in the number sequences section.
- Select the electronic invoicing tile, then select the draft version of the Saudi Arabian ZATCA submission (SA) electronic invoicing feature in the Features section under the Globalisation feature workspace.
- Select the Sales invoice feature setup in the Setups menu and click edit.
- Select the Get next number sequence value action in the Processing pipeline.
- Select Prepare document for submit for Saudi Arabia ZATCA service in the Processing pipeline section.
- Select Integrate with Saudi Arabia ZATCA service in the Processing pipeline section.
- Complete, publish, and deploy the Saudi Arabian ZATCA submission (SA) feature to the service environment.
- Deploy the Saudi Arabian ZATCA submission (SA) feature to the connected application.
Role of middleware in ZATCA integration,
Middleware is software that bridges an operating system and applications, especially in a network. From the Saudi Arabia e-invoicing perspective, middleware is software with APIs to integrate with ZATCA and perform numerous e-invoicing activities.
The e-invoicing middleware comes with the following features:
- Plug-n-play APIs enable easy integration with any ERP/ POS
- Integration without significant changes to ERP/POS
- One API to support all e-invoicing requirements
- Ensures continuous connection with ZATCA
- Faster generation of e-invoices
- Creation of invoices in PDF/ A3 with XML
How can ClearTax help you easily integrate Microsoft Dynamics with ZATCA?
ClearTax APIs will act as middleware connecting the ERP/POS and ZATCA system, ensuring 100% e-invoicing compliance. It automatically registers hundreds of ERP/POS in a single click with ZATCA and receives a cryptographic stamp for each device.
It comes with below features:
- 150+ smart data validations to ensure invoice data is as per ZATCA regulations to ensure invoices are error-free.
- We generate key mandatory fields such as UUID, invoice hash, invoice counter value, and QR code.
- Our software converts the into ZATCA specified UBL 2.1 XML format
- Our API automatically sends invoice data to the ClearTax cloud platform for conversion to ZATCA e-invoice.
- ClearTax adds Phase II QR code & certified XML into the existing invoice to generate the final PDF A/3 invoice.
- We provide e-invoice data archival for up to six years on SLA-based cloud servers.