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Saudi Arabia e-invoices (FATOORAH) now live

Electronic invoices ‘Introduction’ now live 4 Dec 2021; full ‘Integration’ from 1 Jan 2023

The Kingdom of Saudi Arabia (KSA) has now launched B2B and B2C electronic invoices in this first Introduction phase. They may be printed or in other human-readable format for the businesses mandated. This will not require a QR Code (Quick Response Code) except on simplified B2C invoices. The second, ‘Integration’ phase in 2023 involves moving to a full pre-clearance model with an electronic invoice reference ID Unified Unique Identification Number (UUID).

The neighbouring UAE e-invoicing proposal may be published in 2022.

e-invoicing now live

Saudi Arabia’a Tax and Customs Authority, GAZT, has now implemented the requirement for B2B electronic invoices and record keeping for VAT transactions by resident businesses from 4 December 2021. Taxpayers will not have to submit full e-invoices (FATOORAH) to the ZATCA tax authorities in real-time until 1 January 2023. Non-resident taxable persons for VAT purposes are excluded.

This follows examples in Europe (e.g. Italy) and from around the world whereby tax authorities seek to gain transactional-level details of tax liabilities to help detect and prevent evasion. Check VAT Calc’s global live VAT invoice transaction and e-invoice reporting tracker to see where else real-time submissions of invoices is being implemented.

The Zakat Tax and Customs Authority (ZATCA) will roll out the new invoicing rules in two phases:

Phase 1, Issue and Storage (Introduction), 4 December 2021

The covers the obligations to issue, receive and store sales and purchase e-invoices in a secure manner from e-invoicing system. The scope includes the following transactions:

  • Domestic;
  • Zero rated; and
  • Exports

The following transactions are excluded:

  • Exempt supplies
  • Import of goods; and
  • Supplies subject to reverse charge mechanism

Invoices are now required to contain a QR Code for B2C invoices at least. B2B will remain optional.  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.

ZATCA laid out in May 2021 the basic requirements for the Phase 1, Issue and Storage, stage. This covered the:

  • Controls, requirements, technical specifications, and procedural rules to implement the provisions of the e-invoicing regulations
  • e-invoice XML implementation requirements;
  • security structures; and
  • QR Code invoice requirement
  • Invoices may be stored on KSA located servers or in the cloud if there is a direct link to access them.

E-invoicing systems may include: Online cash registers, virtual cash registers on tablets, e-invoicing software installed on a computer, e-invoicing software in- stalled on phone or tablet and cloud- based solutions are examples of e-invoicing solutions.

Phase 1 e-invoice fines

The fine regime in place for the Introductory phase includes penalties of up to SAR 50,000 (approx. €11,700 or $13,300) per infringement for the following offences:

  • Not including a QR Code on simplified invoices
  • Not issuing sales invoices in e-invoice format
  • Failure to secure and store e-invoices
  • Not including full information in an e-invoice, including customer’s VAT number

Phase 2, Live Invoice Reporting (‘Integration’), 1 January 2023 (delayed from 1 Jul 2020)

This phase mandates the obligation to share live invoices with ZATCA. Businesses will be informed at least six months in advance of their eligibility for Phase 2 requirements. Invoices will then be given an electronic stamp,Unified Unique Identification Number, after being verified for basic details. All invoices must be produced in XML, with some anti-tampering features such as digital signature, cryptographic).

VAT Calc’s in real-time global Calculator and Auditor  services produce instant and accurate tax calculations into your ERP, billing, e-commerce or e-invoicing systems. This includes Saudi Arabia, other Gulf states as the follow and the rest of the world.

Middle East & Africa e-invoicing

 

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