Frequently Asked Questions
Phase II of KSA e-Invoicing
This phase commenced from 1st January 2023 and involves specific tax payers and tax payer groups to integrate with the ZATCA’s system for clearance and reporting of e-invoices.
In addition to compliance requirements specified for phase 1, additional fields and information have been specified by ZATCA.
The tax payer will be notified by ZATCA about the system requirements and the integration date via API at least six months in advance.
For Example
If Al Ahmed Trading Co. Ltd., is required to start integrating effective July 1, 2024, then Al Ahmed Trading Co. Ltd, would receive a notification from ZATCA, regarding the same on or before January 1, 2024.
ZATCA presently uses the turnover for Financial Year 2021 or Financial Year 2022, as the basis, to determine, the set of taxpayers, required to be compliant with Phase II requirements.
Each set of taxpayers is identified as a Wave and will be provided a compliance notification at least 6 months in advance.
ZATCA has begun implementing from 1st January 2023 in waves for targeted taxpayer groups. The taxpayer must ensure that the e-invoicing solution is configured for additional technical requirements. Einvoicing solution(s) must be integrated with ZATCA portal.
- As per VAT Implementing Regulations, if the data is hosted on the cloud, it must be accessible through a direct link that should be made available to the authority.
- The solution must allow Persons subject to the e-Invoicing Regulation to export and save their invoices onto an external archival system.
- Each stored invoice must be named as: VAT Registration (tax registration number) + timestamp (date and time at the point of invoice generation) + Invoice Reference Number.
- Taxpayer’s e-invoicing solutions may reside on the cloud following VAT Implementing Regulation.
- Please refer to Data Storage and Archival in ZATCA Einvoicing Detailed Guidelines. (produced below)
5.5. Data Storage and Archival Persons subject to the E-Invoicing Regulation may store their electronic invoices in a server on-premises in the KSA or in the cloud as per their solution requirements and storage requirements and according to the provisions in VAT Law, VAT Implementing Regulation, E-Invoicing Regulation and Resolutions and all other relevant Laws in KSA.
Phase II of e-invoicing in KSA commenced from 1st January 2023.
Standard Tax Invoices and their associated notes must be pushed / integrated to the ZATCA Platform on a real-time basis for clearance.
Upon successful clearance, ZATCA will provide a cryptographic stamp on a real-time basis. The e-invoicing solution has to generate a QR code (with specified fields by ZATCA) which would be inserted in the Standard Tax Invoice.
Only after successful clearance and valid QR code generation , the Einvoice is deemed as complete and ready to be shared with the customer.
Simplified Tax invoices:
Simplified Tax Invoices and their associated Notes can be generated, printed and shared electronically through e-invoicing generation solution, without real-time integration with ZATCA portal.
However, Simplified Tax Invoices and their associated Electronic Notes must be reported to the authority within 24 hours from its generation.
Once the simplified invoices and associated notes are pushed at the interval specified above to ZATCA, an acknowledgement of the submission, will be provided by ZATCA.
Sharing of electronic copy of the invoice with the customer is not a mandatory requirement. A print copy can be generated and shared.
ZATCA does not certify or recommend any E Invoicing generation solution. However, a list of accredited electronic invoice solutions is available in the ZATCA portal.
Yes, you can use your existing e-invoicing solution only for archival purposes, subject to compliance standards laid down by ZATCA.
That would depend on how compliant your invoice & note generation process is, with the ZATCA specifications. In case your invoice and note presently does not include the mandatory fields and information prescribed by ZATCA, then alterations and changes as need be, would have to be done to your present ERP or Einvoicing solution.
Each e-invoice generated electronically must be cleared by the authority issuing it to the buyers, in the case of B2B transactions, which require real-time integration.
B2C invoices need to be reported within 24 hours. You should integrate with ZATCA as per the transaction type, either B2B or B2C.
You could use your Head office server which hosts the ERP to integrate with ZATCA.
Registration with ZATCA is mandatory for Phase 2 is mandatory for any business. External E Invoicing solution is only a service provider, which helps achieve your invoice and notes are fully compliant as per ZATCA guidelines.
ZATCA has released a data dictionary, with full information regarding the entire compliance requirement on this count. The same can be accessed through the link below
A tax invoice should be created when receiving the advance payment.
When a supply invoice is created, advance payments received against the supply will have to be mentioned in the supply invoice, with invoice reference # details.
As per ZATCA e-Invoice Resolution document, Tax Invoice should contain details of VAT Rate and VAT amount at the line-item level.
Each e-invoice generated electronically must be cleared by the authority as a prerequisite before sharing with the buyers.
Electronic invoices pass through validations prescribed by ZATCA. If approved, they are stamped by the authority and returned to the taxpayer.
ZATCA requires all invoice fields to be mandatorily in Arabic. Thus, the language can either be only in Arabic or both English and Arabic.
ZATCA does not allow or accept invoices with zero values. In case free-of-cost samples are issued to prospective customers, then such supplies will be deemed as nominal supply and according an nominal supply invoice with values will have to be issued for the same.
For more information on the threshold of nominal supply value for VAT applicability, please refer to Article 15 of the VAT implementing regulations.
ZATCA presently does not permit multiple invoice sequences. In case you generate invoices in multiple sequences, then it would be advisable to use an external E Invoice generating solution, to integrate with ZATCA.
The solution provider will be able to pick invoices and notes from your ERP and generate E Invoice's in a single sequence.