The taxation authority in Saudi Arabia, Zakat, Tax and Customs Authority (ZATCA), intended to implement e-invoicing in a phased manner. Accordingly, it implemented phase 1 from 4th December 2021 and phase 2 in waves from 1st January 2023. Further, ZATCA classifies the businesses for phase 2 into targeted taxpayers and notifies them six months before their wave. As of 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: Saudi businesses with a turnover of more than SAR 500 million and less than SAR 3 billion in 2021 fall under wave 2 from 1st July 2023.
- Wave 3 under phase 2: VAT-registered businesses in Saudi with a turnover of more than SAR 250 million and less than SAR 500 million in 2021 or 2022 fall under Wave 3 w.e.f 1st October 2023.
- Wave 4 under phase 2: Saudi VAT-registered businesses with a turnover of more than SAR 150 million and less than SAR 250 million in 2021 or 2022 fall under wave 4 from 1st November 2023.
Hence, the applicable taxpayers shall integrate their ERP/POS with ZATCA on time to generate phase 2 compliant invoices.
e-Invoice generation workflow in SAP S4/ HANA
Here’s the e-invoice generation workflow in SAP S4/ HANA:
- The entire workflow can be performed in SAP S4/ HANA ERP, including invoice generation, e-invoice conversion, PDF A/3 generation, and emailing of invoices.
- You don’t have to log in to any other platform and can seamlessly complete the actions in SAP S4/ HANA.
- Your invoicing activities won’t be delayed as end-to-end e-invoice generation and ZATCA approval flow happen immediately.
- You can generate e-invoices in two ways in SAP S4/ HANA:
- The first is where the user selects one or more pending invoices and clicks “Generate E-Invoice”.
- The second one, the e-invoice, will automatically generate once the user creates or approves the invoice in ERP.
Role of middleware in ZATCA integration
Middleware is software that connects two other components. From Saudi Arabia’s e-invoicing perspective, middleware is software with APIs to integrate with ZATCA and perform numerous e-invoicing functions.
The e-invoicing middleware comes with the following features:
- RESTful APIs to easily integrate with any ERP/ POS
- Integration without significant changes to ERP/POS
- One API to support all invoice document types
- Ensures seamless connection with ZATCA
- Uninterrupted generation of e-invoices
- Invoice creation in PDF/ A3 format with embedded XML
How can ClearTax help you easily integrate SAP S4/ HANA with ZATCA?
ClearTax APIs act as middleware connecting the ERP/POS and ZATCA system and ensure 100% e-invoicing compliance. ClearTax automatically registers hundreds of ERP/POS in a single click with ZATCA. Further, it 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 and invoices are error-free.
- Generating mandatory fields such as UUID, QR code, invoice hash, previous invoice hash, and invoice counter value.
- Our software converts the invoice data in XML format using ZATCA-specified UBL 2.1 schema
- Our API automatically sends invoice data to the ClearTax cloud platform to convert into a ZATCA complaint e-invoice.
- Adds the Phase II QR code & certified XML to the existing invoice to create the final PDF A/3 invoice.
- ClearTax provides e-invoice data archival facility for up to six years on SLA-based cloud servers.