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Saudi Arabia e-Invoicing: Process Flow for Generating e-Invoices in Phase II

Updated on: Jan 18th, 2023 - 12:45:25 PM

4 min read

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Zakat, Tax and Customs Authority (ZATCA) plans to implement phase II of e-invoicing in Saudi Arabia from 1st January 2023. Also, ZATCA intends to implement this phase in waves by dividing taxpayers into targeted taxpayer groups. It also informs the applicable businesses of their wave at least six months in advance.

What is the process flow for phase II KSA e-invoicing?

All the e-invoicing applicable businesses shall integrate their e-invoicing solution with ZATCA’s system. The e-invoicing resolution states that the standard tax invoices shall be cleared in real-time, whereas it is sufficient to report the simplified tax invoices within 24 hours of generation.

Also, the phase II requirements include device registration, cryptographic stamp for each e-Invoicing Generation Solution (EGS) unit, modified QR code, ZATCA compliant XML generation, and invoice format of PDF A/3 (XML embedded). Also, the XML shall include new key fields such as Universally Unique Identifiers (UUID), Previous Invoice Hash (PIH), and Invoice Counter Value (ICV).

However, the process flow for generating an e-invoice differs based on the type of invoice. With the phase II implementation date approaching, it is important to understand the process of generating electronic invoices in the Kingdom of Saudi Arabia (KSA). This article explains the process flow for generating the standard and simplified tax invoices in phase II of Saudi Arabia’s e-invoicing.

Standard Tax Invoice Generation Flow in Phase II

Here’s the step-by-step process flow of standard tax invoices in phase II:

Step 1: First, you must generate invoices using the ERP.

Step 2: Once your EGS unit receives the invoice data, it shall generate the UUID, PIH, and ICV along with the ZATCA-compliant XML file.

Step 3: After that, the EGS unit will send the data files to the ZATCA clearing system.

Step 4: If the invoice data is in valid format and complaint as per rules, ZATCA will successfully clear the invoice and places a cryptographic stamp.

Step 5: Your EGS unit receives the ZATCA cleared XML and QR code.

Step 6: Now, your EGS unit shall generate the invoice in PDF A-3 format using the data received from ZATCA.

Step 7: You must store and archive the invoices according to the ZATCA specified XML format.

Step 8: You can now share PDF A-3 (XML embedded) or XML e-invoice with your customer. However, when you are sharing the printed copy of the standard tax e-invoice, you must e-mail the XML to the buyer.

Step 9: Also, your customer can validate the standard tax e-invoice using ZATCA’s special app.

Simplified Tax Invoice Generation Flow in Phase II

Here’s the step-by-step process flow of simplified tax invoices in phase II:

Step 1: First, you must generate invoices using the ERP.

Step 2: Once your EGS unit receives the invoice data, it shall generate the UUID, PIH, and ICV. In addition, it shall generate a QR code including the details such as a cryptographic stamp, public key, etc. Your EGS unit shall also maintain the invoice counter.

Step 3: Now, you can share this simplified tax e-invoice with your customer.

Step 4: Your customer can validate the simplified tax e-invoice using ZATCA’s special app.

Step 5: Make sure to report these simplified tax e-invoices with ZATCA within 24 hours of generation.

Step 6: If the invoice data is in valid format and complaint as per rules, ZATCA will issue the acknowledgment validating the simplified e-invoices.
Step 7: Finally, don’t forget to store and archive invoices in ZATCA specified XML format.

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