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All About e-Invoicing in the Kingdom of Saudi Arabia (KSA)

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The Kingdom of Saudi Arabia (KSA) started focusing on several initiatives for the digitalisation of the economy. The General Authority of Zakat and Tax (GAZT), merged with Zakat, Tax and Customs Authority (ZATCA), intended to introduce e-invoicing in KSA and published a draft amendment on 17th September 2020 in line with Value Added Tax Implementing Regulations. The draft covered aspects of e-invoicing rules.

e-Invoicing (Fatoorah) in KSA

The people of KSA refer to e-invoicing widely as Fatoorah and e-invoicing software is referred to as Fatoorah software. e-Invoicing is a procedure that aims to convert issuing invoices from paper into electronic mode. The e-invoicing process allows exchanging and processing invoices, credit notes, and debit notes in a structured electronic format between buyer and seller using an integrated electronic solution.

All the provisions related to a tax invoice in the Value Added Tax (VAT) legislation will apply to an e-invoice, and any non-compliance will result in penalties from ZATCA. Apart from this, the provisions related to proof of electronic transactions and electronic signatures in the Electronic Transactions Law of KSA shall apply to e-invoices and electronic notes issued.

e-Invoicing implementing authority in KSA

The Zakat, Tax and Customs Authority (ZATCA) is the authority for e-invoicing in KSA. GAZT, now known as ZATCA, issued the draft e-Invoicing Regulations in KSA in March 2021. The authority allowed the public and stakeholders to provide their feedback on the e-Invoicing Regulations on or before 17th April 2021. The e-Invoicing Regulations were finally published on 28th May 2021.

The regulations stated all the resident taxpayers should mandatorily be fully equipped to issue, save and modify e-invoices by 4th December 2021. These regulations specify the terms, requirements, and conditions of electronic invoices and electronic credit and debit notes. Also, ZATCA has released detailed guidelines on e-invoicing for smooth implementation.

What is an e-invoice in KSA?

It is an invoice issued and saved in an electronic format generated through an electronic system and contains the tax invoice, simplified tax invoice and respective Credit & Debit Notes (CDNs). It is clarified that a handwritten or scanned invoice will not be considered an electronic invoice. There are two types of tax invoices:

  • Standard tax invoice: It is the invoice issued by a Business to another Business (B2B), containing all the elements of a tax invoice, especially the VAT registration number of the buyer and seller.
  • Simplified tax invoice: An invoice often issued by a Business to consumer (B2C) containing the main elements of a simplified tax invoice.

The e-invoices should be issued in the Arabic language. However, additional languages are permitted, apart from the Arabic language.

Who has to issue an e-invoice in KSA?

All entities registered under KSA VAT, the customers and the third parties who issue invoices on behalf of any taxable individuals must use the electronic invoices. All VAT regulations applicable to tax invoices, credit notes and debit notes continue to apply to e-invoices as well. However, non-resident taxpayers under VAT are excluded from the scope of e-invoicing.

Phases of e-invoicing in KSA

The ZATCA is implementing e-invoicing in two phases:

Phase 1: Generation

This phase is known as the ‘Generation Phase’, in which taxpayers have to generate and store tax invoices, simplified tax invoices and respective CDNs through electronic solutions compliant with Phase 1 requirements. Implementation of this phase will start from 4th December 2021. It is to be compiled by all taxpayers (excluding non-resident taxpayers) and any other parties issuing tax invoices on behalf of suppliers subject to VAT.

The procedures of issuing e-invoices will be similar to issuing invoices at present but through a compatible electronic billing system. The e-invoice shall include all the required items based on the type of invoice.

Phase 2: Integration

This phase is known as the ‘Integration Phase’ and rolled out in waves by the targeted taxpayer group. Phase 2 will begin from 1st January 2023, and ZATCA will notify taxpayers of their wave at least six months in advance.

This phase involves introducing technical and business requirements for electronic invoices and electronic solutions and integrating with ZATCA’s systems. In this phase, taxpayers’ must integrate their systems of issuing electronic invoices and debit and credit notes with ZATCA’s systems to share data and information.

The seller has to ‘clear’ the Tax Invoice from ZATCA in real-time and then share it with the buyers as a legally valid e-invoice. However, the seller is required to report simplified invoices to ZATCA within 24 hours from the time of generation.

Benefits of e-invoicing for KSA

The following are the few reasons for introducing e-invoicing or Fatoorah in KSA:

  • Transparency in commercial transactions helps the government ensure better tax compliance.
  • Electronically generated invoices help maintain better accuracy and effortless transactions with customers.
  • e-Invoicing implementation increases efficiency in transactions for both businesses and governments owing to the data standardisation, seamless trade, speedy communication, faster payments and reduced costs.
  • Generation of invoices electronically will result in reducing the usage of paper invoices and is environment friendly.
  • e-Invoicing allows the government to detect fake invoices or related malpractices and keep a check on the shadow economy.

All Articles

  1. ZATCA exempted a few transactions from SA e-invoicing. This article lists transactions for which you don’t have to generate e-invoices or related CDNs.
  2. As per ZATCA guidelines, the EGS shall enrich the XML file with ICV and PIH values. This article explains the role of XML data enrichment in SA e-invoicing.
  3. Phase II of e-invoicing in Saudi requires taxpayers to onboard their EGS with the fatoora portal. This article explains all about the fatoora portal.
  4. This article lists reasons for failures while generating the e-invoices in phase II of KSA e-invoicing and also explains how to solve failed invoices.
  5. This article explains the process flow for generating e-invoices in phase II of Saudi Arabia's e-invoicing.
  6. This article provides a gist of Phase I QR Code vs Phase II QR Code in KSA e-invoicing.
  9. You can revoke the CSID whenever needed, and ZATCA might also automatically revocate your CSIDs. This article explains all about the revocation of CSIDs.
  10. ZATCA has mandated to renew the CSIDs once every five years. This article explains how to renew the existing CSID under KSA e-invoicing.
  11. This article explains all about Cryptographic Stamp Identifier (CSID), including, who needs it, how to obtain it, and the steps for receiving it.
  12. This article explains step-by-step how to validate ZATCA e-invoice using QR code and how to download and use the ZATCA VAT app.
  13. This article explains the step-by-step process of finding the ClearTax e-invoicing solution from complaint e-invoice solutions on the ZATCA portal.
  14. This article explains penalties for VAT & e-invoicing offences in KSA, including the latest reclassification made by ZATCA.
  15. This article explains the concept of proportional input VAT credit, when you can claim it and how to claim such tax credit under the KSA VAT law.
  16. This article explains the way to contact the ZATCA helpline. Also, it describes how to report tax evasion, share opinion, and give feedback on the portal.
  17. This article answers most of the FAQs in KSA VAT including, general queries, registration, return filing, refund, payment and ZATCA portal.
  18. This article explains all about credit notes, debit notes and vouchers under KSA VAT, including meaning, due date, contents and comparison.
  19. This article explains everything about the VAT payment in KSA, including the late payment penalty and extension for making VAT payments.
  20. This article explains everything about the place of supply rules for goods and services in KSA VAT, including special rules and exceptions.
  21. This article explains all about Reverse Charge Mechanism (RCM) in KSA, including applicability, tax payment, reporting, input tax deduction.
  22. This article explains all about VAT invoicing in KSA, including tax invoices in special circumstances and other types of documents used.
  23. The basic VAT rate was increased from 5% to 15% w.e.f 1st July 2020. This article explains all about VAT rates, including transitional provisions.
  24. Zero-rated supplies mean goods and services on which VAT is applicable at 0%. This article explains all about zero-rated supplies under KSA VAT.
  25. This article explains all aspects of the time of supply under the Value Added Tax (VAT) Law in the Kingdom of Saudi Arabia (KSA).
  26. This article explains all about VAT records and books of accounts in Saudi Arabia, including documents to be maintained, format, storage, location etc.
  27. This article explains the input VAT deduction, including types, eligibility, restrictions, timing, and documents required to claim the input tax credit.
  28. This article lists down all the important technical terms used in KSA for e-invoicing and explains them in a very simple manner.
  29. This article will explain the relation between e-invoicing and Transfer Pricing rules in KSA and its impact on taxpayers’ compliance.
  30. This article will explain the SDK toolkit, how it does e-invoicing compliance in KSA and who must use the Compliance and Enablement Toolbox.
  31. A simplified e-invoice is applicable only for retail (B2C) transactions. This article lists down the mandatory fields in a simplified e-invoice.
  32. Standard e-invoice is mandatory from 4th December 2021 in KSA. This article explains the mandatory fields that need to be filled in an e-invoice.
  33. This video explains all about UUID, including uses, e-invoicing regulations, who must generate, format, validity, and how to obtain it.
  34. This article explains all about VAT registration in KSA, including who should register, special cases, steps to register, VAT deregistration.
  35. This article explains all anti-tampering measures in a KSA e-invoicing solution applicable from generation and integration phases.
  36. An ideal e-invoicing solution in KSA should not have some prohibited functionalities. This article explains the phase-wise prohibited functionalities.
  37. Data storage and archival requirements are separately listed down in the e-Invoicing Regulations defined by the ZATCA in Saudi Arabia. Know more.
  38. This article explains all the e-invoicing requirements in KSA, including format, content, integration and mandatory security requirements.
  39. This article explains all about VAT return filing in KSA, including who has to file, types, how to file, amendments, changing filing period.
  40. This article explains the basics of KSA VAT law, including registration, types of supplies, input tax deduction, records, returns, appeals and penalties.
  41. This article explains the obligations that all VAT-registered taxpayers need to adhere to under the e-invoicing regime in the KSA.
  42. This article explains all about the ZATCA portal (earlier known as the GAZT), including e-services, rules and regulations, e-invoicing, etc.
  43. This article explains the mandatory technical functionalities for 1st phase of e-invoicing in KSA, such as format, structure, data processing, security etc.
  44. This article explains all about QR codes on e-invoices in KSA, including purpose, applicability, contents, and generation.
  45. This article explains the impact of e-invoicing on third-party billing in KSA, including how it works, requirements, liability and examples.
  46. All taxpayers must adopt ZATCA defined compliant e-invoice solution in KSA. This article includes types, examples and features.
  47. Phase 1 of e-invoicing starts from 4th December 2021 in KSA. This article explains the actions to be taken by taxpayers and readiness steps.
  48. This article explains the mandatory fields in e-invoices such as UUID, cryptographic stamp, identifier, invoice hash, QR code and invoice counter.
  49. This article explains all aspects of simplified e-invoices in KSA including, who is liable, how to issue, current vs proposed process, key fields etc.
  50. e-Invoice has to be generated for self-billing cases in KSA. This article details the procedures, examples and benefits of self-billing under e-invoicing.
  51. The e-Invoicing solution should comply with KSA VAT Regulations. This article explains the key considerations while choosing an e-invoicing solution in KSA.
  52. This article explains the clearance of tax e-invoices and reporting of simplified e-invoices under Saudi Arabia e-invoicing.
  53. The adoption of the e-invoicing system is picking up pace in the Gulf countries. With the Kingdom of Saudi Arabia (KSA) issuing the regulations and announcing the timelines for implementation, the United Arab Emirates (UAE) has also indicated its plans to mandate the system.
  54. KSA Banks can implement the e-Invoicing system by following a step-by-step process. This article gives out Tips for a smooth transition for banks in Saudi.
  55. Scope and applicability of e-invoicing in Saudi Arabia is of importance to know whether or not e-invoicing system applies to a person and a transaction.
  56. KSA e-invoicing FAQ are issued by the ZATCA of the Kingdom of the Saudi Arabia. It is comprehensive and details several scenarios. Read to know more.
  57. As per VAT law in KSA, there are different types of invoices, and the taxpayers have to generate the same type of e-invoices even under e-invoicing.
  58. e-Invoicing phases are divided broadly into two in the Kingdom of Saudi Arabia. The generation phase applies from 4th December 2021. Read more.
  59. e-Invoicing UAE will be implemented soon following Saudi Arabia. Read to know the implementation dates, strategy and tips in the United Arab Emirates
  60. e-Invoicing Regulations are released in the Kingdom of Saudi Arabia or KSA for all the resident VAT taxpayers. Read the article to know what's given in law.
  61. E-Invoicing in Saudi Arabia

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