Simplified electronic invoices are specially designed invoices for instant Business-to-Consumer (B2C) transactions where the buyer is not liable to claim input VAT deductions. In general, these types of invoices exclude the buyer’s details. For instance, these invoices might be issued by retail shops, grocery stores, hotels, transport hubs, sports venues, etc., where the end-user is a consumer.
However, the buyer’s details will form part of a simplified e-invoice in cases such as medical and educational services subject to tax according to special treatment from the Authority.
All taxable individuals (except non-resident taxable individuals), who are subject to e-Invoicing Regulations, must issue simplified e-invoices in case of B2C transactions. Such persons are:
However, e-invoices are NOT required to be issued in the following cases:
Under the 1st Phase, a simplified e-invoice must be issued and shared with the customers at the point of sale (POS), and a copy should be subsequently archived and stored. The applicable taxpayer can simply share the e-invoice with customers without further reporting to Zakat, Tax and Customs Authority (ZATCA).
Under the 2nd Phase, which shall commence from 1st January 2023, simplified e-invoices must be reported to the Authority within 24 hours. The taxable persons shall be required to integrate their systems with the ZATCA system.
Example: Al Salim operates three retail stores and is registered under VAT issuing manual invoices for sale to his customers. Now, for any sale after 4th December 2021, Al Salim will need to issue simplified e-invoices with a QR code on them through an e-invoicing solution and store and archive such invoices. Under Phase 2, such invoices will also need to be reported to ZATCA within 24 hours of the sale.
Simplified e-invoices for Phase 1 are similar to current simplified invoices with an additional QR code. No specific file format for such invoices has been prescribed currently, though it is expected that further details will be issued before implementation.
Here is a sample of how a simplified e-invoice should be like:
Each simplified e-invoice generated by a solution must include certain fields like:
|1||UUID||A unique number used to identify an invoice||Integration (Phase 2)|
|2||Cryptographic Stamp||Automatically generated by the e-Invoicing Solutions and are not visible on the invoice||Integration (Phase 2)|
|3||Previous Invoice Hash||The previous invoice hash must be included within the subsequent e-invoice.||Integration (Phase 2)|
|4||QR Code||QR Code generated should be capable of showing specific minimum fields such as:|
a. Seller’s name
b. VAT registration number
d. VAT total
e. Invoice total with VAT
|Generation and Integration (Both Phase)|
Step 1: Businesses will first need to identify whether e-Invoicing Regulations apply to them.
Step 2: If e-Invoicing Regulations are applicable, the taxpayer needs to identify those transactions that will be impacted by it.
Step 3: The taxpayer must select an optimum e-invoicing solution that can either be purchased or developed in-house. It should be ensured that it meets ZATCA’s requirements.
Step 4: e-Invoices should be issued in electronic mode only for all applicable transactions. Such invoices should be stored for future use.
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