Saudi Arabia E-invoicing phase one | Preparing your business with ERPNext
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How to get ready for Saudi Arabia E-invoicing phase one?
RECAP OF PHASE 1 REQUIREMENTS For December 4th, 2021, taxpayers should:
1. Stop issuing manual invoices
handwritten invoices and invoices written using text editing tools are not considered e-invoices
2. Use a compliant electronic invoicing solution
e-invoicing solutions must comply with the requirements and specifications published under the e-invoicing laws and regulations and can be summarized for Phase 1 as follows:
Ability to generate e-invoices with the required elements including QR codes
Ability to timestamp the e-invoice copies archived in the solution
Absence of prohibited functionalities:
Software time change
Tampering of e-invoices or logs
Multiple invoice sequences
3. Ensure invoices include the required additional fields
The VAT registration number of the buyer if the buyer is a registered VAT taxpayer in addition to the invoice type Description as a title. QR code can be added (Optional)
Simplified Tax Invoices:
A mandatory QR code generated by the taxpayer’s E-Invoicing solution based on ZATCA’s specifications, in addition to the invoice type Description as a title.
Saudi Arabia E-invoicing phase one READINESS STEPS
Businesses are recommended to follow the 4 steps below to ensure timely readiness for e-invoicing:
Understand e-invoicing requirements
familiarize yourself with e-invoicing leveraging the materials available on this website
Using a complaint solution based with the E-Invoicing requirements
Taxpayers can approach a solution provider or their internal technical teams to acquire or upgrade to a compliant solution.
Test your e-invoicing solution
test your e-invoicing solution before 4 December 2021 to ensure invoices are issued correctly
Ensure your staff is ready
create awareness amongst your staff and ensure relevant staff is familiar with your e-invoicing solutions
Saudi Arabia E-invoicing phase one FAQ
How will my invoicing practices change starting from December 4, 2021?
- All Persons subject to the E-Invoicing Regulation must use compliant electronic systems to generate invoices starting from December 4th, 2021. Manual invoices will no longer be considered as compliant invoices.
- E-invoices must include the minimum additional fields (see next question)
- E-invoicing compliant electronic systems should be able to generate QR codes.
- E-invoicing compliant electronic systems must not allow for the prohibited functions specified by ZATCA.
- Please approach your solution provider or your internal technical teams to ensure your electronic systems are compliant with ZATCA requirements. In addition, developers and subject matter experts may visit ZATCA’s website for viewing all requirements (business, technical, security, etc.).
What does an e-invoice look like and how is it different from current invoices?
- E-invoices for Phase 1 (4 December 2021) are similar to current invoices, with minimum additional fields:
a. For simplified tax invoices and their associated notes (usually issued for B2C transactions) a mandatory QR code.
b.For tax invoices and their associated notes (usually issued for B2B transactions), an optional QR code and mandatory VAT number of the buyer if the buyer is a registered VAT taxpayer.
- There is no specific file format mandated for Phase 1, however, invoices must include the mandatory fields and must be issued from an electronic system meeting ZATCA’s requirements. In addition, electronic copies of all issued invoices must be stored by the taxpayer.
Does my invoicing system need to be constantly connected to the internet for Phase One (December 4, 2021)?
Yes, the system or solution used for generating and storing the invoices must be able to have an internet connectivity for both phases.
Do I need to integrate my invoicing system/solution with ZATCA on December 4, 2021?
No, integration with ZATCA is not required for Phase One starting December 4, 2021.
Does my solution need to be able to generate QR codes on invoices on December 4, 2021?
Yes, QR code are mandatory for simplified tax invoices (usually issued for B2C transactions) and optionally for tax invoices (usually issued for B2B transactions). QR code is not provided by ZATCA and shall be generated by the electronic system. Please approach your solution provider or technical teams to acquire or upgrade to a compliant electronic systems.
What are the minimum requirements that must be shown after scanning a QR Code?
As part of Phase 1 (Generation Phase), the below fields are the minimum required fields that must be shown after scanning a QR code in a simplified tax invoice:
- Seller’s name
- VAT registration number of the seller
- Time stamp of the Electronic Invoice or Credit/Debit Note (date and time)
- Electronic Invoice or Credit/Debit Note total (with VAT)
- VAT total
Do my e-invoices need to be approved by ZATCA before sharing them with the buyer, or reported to ZATCA after issuing them?
No, for Phase 1 (December 4, 2021), taxpayers are not required to approve, clear or report invoices to ZATCA.
What are some of the prohibited functionalities for Phase 1 (Generation Phase) that are not allowed to be part of the E-invoicing system?
- Lack of user management capabilities (uncontrolled access) for example:
▪ Anonymous Access
▪ Absence of user session management
- Tampering of e-invoices or their associated notes or logs
- Multiple Electronic Invoice sequences
- For additional details on the prohibited functionalities, please refer to Annex (1) “Technical Requirements of E-invoice Generation Solutions” in the resolution.
What is Phase 1? When will it be enforced and to whom does it apply?
- Phase 1 known as the Generation phase will require taxpayers to generate and store compliant tax invoices and notes using compliant electronic systems.
- Phase 1 is enforceable as of December 4th, 2021 for all Persons subject to the E-Invoicing Regulation.