Zakat, Tax and Customs Authority (ZATCA), the tax authority in the Kingdom of Saudi Arabia (KSA), intends to implement e-invoicing in two phases. It included all resident taxpayers except non-residents (for VAT purposes) under the e-invoicing initiative.
Accordingly, ZATCA rolled out phase 1 of e-invoicing in Saudi Arabia w.e.f 4th December 2021. Also, ZATCA notified that the businesses having turnover of more than SAR 3 billion in 2021 must implement phase 2 beginning from 1st January 2023.
Taxpayers must understand and comply with the phase 2 requirements. Under the integration phase, i.e., phase 2, applicable businesses must integrate their accounting/POS systems with the Fatoora portal for ‘reporting’ the simplified tax invoices and related Credit and Debit Notes (CDNs) within 24 hours from the time of generation.
This article explains how a business can integrate with ZATCA to seamlessly implement phase 2 of electronic invoicing in Saudi Arabia.
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.
When you have multiple stores, you must integrate accounting/ POS systems used at all stores with ZATCA. Integrating with ZATCA in the case of multiple stores with different business lines, such as e-commerce and retail businesses, is challenging.
Also, you cannot adopt a separate e-invoicing solution for each store. Hence, you should adopt a unique solution, such as ClearTax e-Invoicing software, to integrate with ZATCA and seamlessly generate ZATCA-compliant e-invoices for simplified tax invoices.
You must follow the below steps to easily integrate multiple ERP/POS systems with ZATCA:
Step 1: Identify all store-level accounting, billing, and POS systems.
Step 2: Connect all the identified accounting/ POS systems with store-level servers or continue with the current configuration of servers.
Step 3: Your store-level or POS-level servers should be equipped to instantly generate an XML file and QR code based on the requirements using ZATCA Software Development Kit (SDK).
Step 4: Once the invoice is successfully generated, the store-level or POS-level servers shall transfer the same to the ‘central server if present or to the ClearTax cloud platform directly.
Step 5: The ‘central server’ will forward the invoice data to the ‘ClearTax Cloud Platform’ that comes with the below features:
Step 6: ‘ClearTax Cloud Platform’ shares the XML generated with the Fatoora portal for ‘Reporting’ the simplified tax invoices or related CDNs.
Step 7: Fatoora portal validates the invoice data and returns it with acknowledgement status.
Step 8: ‘ClearTax Cloud Platform’, in return, shares the invoices in PDF/A-3 format with the ‘central server’ for further use.
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