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E-invoicing

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Invoicing

What is e-invoicing

E-invoicing is the process of generating invoices in a digital format, so you can issue and store them electronically. The Zakat, Tax and Customs Authority (ZATCA) in the Kingdom of Saudi Arabia (KSA) has rolled out regulations mandating businesses to adopt an e-invoicing process in two phases, starting on December 4, 2021.

For KSA VAT taxpayers, e-invoices will resemble the VAT tax invoices that are generally issued, but will be generated through an online system. Do note that a paper invoice that is copied or scanned is not considered an e-invoice.

Once issued, an e-invoice cannot be edited. However, you can issue electronic notes (debit and credit notes that are VAT compliant and issued through an electronic system). These should be issued with reference to the original invoice that was issued. For instance, if your buyer has returned your product, you cannot alter the original invoice, but you can issue a credit note through the e-invoicing system.

Benefits

Other benefits of e-invoicing for taxpayers.

A better experience for sellers and buyers. When you issue invoices quickly in real time, input tax credits will be processed faster.

E-invoicing is mandatory for all B2B, B2G, and B2C transactions. While issuing an e-invoice to a buyer, you should provide a printed copy as well.

A streamlined electronic invoicing process reduces slip-ups and additional hassles for business owners. Your workload gets reduced, you get paid faster, and you can retrieve documents easily when storing them digitally.

The e-invoicing provisions will apply to all taxable goods and services that are subject to VAT (whether standard or zero rate).

The invoices have to be in Arabic. You may opt to translate them or add another language, but it is mandatory to issue the e-invoice in Arabic.

Electronic data will be more secure and less error-prone than paper entries. With a proper system for validating invoices, there will be fewer chances for fraud, leading to fair competition and improvement of trade.

Types of e-invoices

Tax e-invoice (Standard e-invoice).

Tax e-invoices are issued for B2B and B2G transactions, and are generally used for claiming input VAT deduction by buyers.

In phase 1, these invoices will have to be shared with buyers in the required format.

In phase 2, these invoices can be shared with buyers only after being cryptographically stamped and cleared by ZATCA. If your buyer is VAT registered, you will have to add their VAT registration number to the invoice, and you can opt to add a QR code

Simplified e-invoices

Simplified e-invoices.

Simplified e-invoices are issued for B2C transactions at the point of sale. With such invoices, the buyer won’t need to use the invoice for input VAT deduction.

If you are issuing a simplified tax invoice (B2C invoice), your e-invoicing system must generate a QR code with the invoice. This is important for validating your e-invoices.

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