The Kingdom of Saudi Arabia (KSA) planned to implement e-invoicing in two phases through Zakat, Tax and Customs Authority (ZATCA). e-Invoicing applies to all resident taxpayers except non-residents for VAT purposes.
Accordingly, ZATCA implemented phase 1 of e-invoicing in Saudi Arabia on 4th December 2021. Also, ZATCA announced the implementation of phase 2, that businesses with a turnover of more than SAR 3 billion in 2021 must implement phase 2 from 1st January 2023.
Understanding the phase 2 regulations is important for taxpayers to comply with phase 2 . i.e., the integration phase. Under phase 2, the businesses must integrate their POS/ accounting systems with the Authority’s system for ‘Clearance’ of tax invoices and related Credit and Debit Notes (CDNs) and ‘Reporting’ of simplified tax invoices and related CDNs.
This article explains how a taxpayer can integrate with the Fatoora portal as the phase 2 implementation date is approaching.
You should keep the following points in mind while choosing the integration mode:
The following are the types of integrations available for businesses to comply with phase 2 of e-invoicing in Saudi Arabia:
It is challenging to integrate with ZATCA in case you have multiple ERP/ POS systems across multiple businesses, such as B2B, e-commerce, and retail businesses. It is virtually impossible to have separate e-invoicing solutions for each business or each ERP/POS due to integration costs, complexity and other reasons. Hence, adopting one unique solution, such as ClearTax e-Invoicing software, can help you easily integrate with ZATCA to comply with phase 2 of e-invoicing in Saudi Arabia.
You must follow the below steps to easily integrate multiple ERP/POS systems with ZATCA:
Step 1: Identify all the ERP, custom billing solutions, cash registers and cloud-based POS systems across all your business units, such as B2B, retail and e-commerce.
Step 2: Register the requisite number of devices that will ensure seamless interaction with ZATCA across all your business units
Step 3: Share the invoice data from all the identified ERP/POS systems with the ‘ClearTax Cloud Platform’ that comes with the below features:
Step 4: ‘ClearTax Cloud Platform’ generates XML as per the ZATCA specifications and shares the same with the Fatoora portal for ‘Clearance’ in case of standard tax invoices or related CDNs and ‘Reporting’ in case of simplified tax invoices or related CDNs.
Step 5: Fatoora portal validates the invoice based on the type of invoice and returns it with a cryptographic stamp and QR code, wherever applicable.
Step 6: ‘ClearTax Cloud Platform’, in return, shares the invoices in PDF/A-3 format with all the connected ERP/POS systems for further use.