E-invoicing will be required starting on December 4, 2021, for all taxpayers in the Kingdom of Saudi Arabia (KSA), according to the Zakat, Tax, and Customs Authority (ZATCA). Penalties will apply if the KSA e-invoicing laws are not followed.
Every taxpayer must thus be aware of the regulation’s obligations. This post outlines seven essential details concerning e-invoicing in Saudi Arabia that you should be aware of.
Mandatory Issuance Of E-Invoices In Saudi Arabia
Every taxpayer is required to follow KSA e-invoicing standards and submit their tax invoices online. The requirements specify that the e-invoices must be sent in Arabic, while other languages are acceptable.The rules state that other languages are permissible, but that the e-invoices must be sent in Arabic.
To all taxable supplies, the e-invoicing requirement is applicable (standard and zero-rated). In Saudi Arabia, e-invoicing is implemented in stages. The first stage requires taxpayers to send tax invoices online. Within 180 days after the publishing date of the first phase, the specifics, rules, and specifications for the future phases must be made available.
KSA E-Invoicing Solution
ZATCA-compliant e-invoicing systems must be used for e-invoicing in Saudi Arabia. Saudi Arabian e-invoicing solutions consist of e-invoicing software that makes it easy to comply with e-invoicing rules. These e-invoicing options give taxpayers a comfortable and user-friendly experience while assisting them in adhering to the requirements. If you fail to meet any of the important conditions, they are designed to display an error message prior to sending an invoice.
Goal of Saudi Arabia’s E-Invoicing Regulation
The e-invoicing rule seeks to improve tax invoice issuance efficiency, transparency, and security.
- Efficiency: E-invoicing solutions assist enhance productivity and save time when creating and sending e-invoices, whereas the manual approach necessitates a lot of time, effort, and human labor.
- Transparency: Transparency is made possible by the KSA e-invoicing system, which automates the whole tax invoice issuance procedure. It aids in keeping accurate records of the invoices that are sent.
- Security: Electronic invoicing provide greater real-time tax compliance by allowing the government to precisely monitor taxable activities.
How To Comply With The KSA E-Invoicing Rules?
- Having an e-invoicing system to easily create electronic invoices is a basic necessity to comply with these rules. As you are ready to comply with e-invoicing, you can think about the following things.
- Identifying the transactions for which electronic invoicing are necessary (all taxable supplies).
- Recognizing the current processes (billing, accounting, and procurement) that the e-invoicing requirements would affect to incorporate new e-invoicing solutions, analyze the software capabilities of your present billing system or software supplier. You may compare some of the top e-invoicing options available in Saudi Arabia to choose which is the most dependable.
- Analyze how various software programs interact with the Arabic language support and ZATCA’s system.
Understanding Local Offline Archiving
The ZATCA mandates that the e-invoices be digitally preserved on the server. The e-invoices must be stored electronically on a Saudi Arabian server in order to archive them offline. The archive must adhere to the technical requirements of naming convention, nonrepudiation of the structured data files, or e-invoices, and nontampering.
What will KSA E-Invoicing Phase 2 Include?
The integration phase (fatoorah), which is the second phase of the KSA’s e-invoicing legislation, begins on January 1st, 2023. For a select group of taxpayers listed in the requirements for e-invoicing, the integration phase is required.
Such taxpayers are divided into target groups by the authority, and each target group is required to connect their own e-invoicing system with the ZATCA’s system. These target groups will be informed about the integration six months in advance by ZATCA. Technical requirements, requirements, controls, and procedural restrictions are all part of the regulations.
Key Fields That Must Be Included In An E-Invoice
The KSA’s e-invoicing system mandates that certain areas be thoroughly and precisely described. With the exception of the QR code, the integration step (phase 2) requires the essential required information from the e-invoice. When creating streamlined e-invoices and related notes, phase 1 of the generating process must include the addition of the QR code field. To avoid any non-compliance, it is essential to be informed about Saudi Arabia’s e-invoicing regulations.
In order to maximize your productivity, transparency, and security while generating e-invoices, you need carefully choose the e-invoicing system. You may contact MIALLP to assist you with Bookkeeping & Accounting in Saudi Arabia, our experts will be happy to guide you through the whole process of bookkeeping and accounting.
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