E-invoicing in Saudi Arabia: final requirements for companies

ZATCA (Zakat, Tax and Customs Authority, previously called GAZT) has already announced the final requirements for Implementing the Provisions of the E-Invoicing Regulation in Saudi Arabia. The important note is that the e-invoicing regulations will significantly reduce VAT leakage, help to adapt to cashless economy, and reduce shadow economy. The transition process from paper-based to electronic invoices shall reduce fraud and tax evasion.

The process of e-invoicing in the Kingdom (called also Fatoorah) means that taxable persons will no longer be allowed to generate or store paper or PDF invoices. In the end they are obliged to comply with the e-invoicing system. Digital transformation in invoicing is split by ZATCA in 2 phases of implementation. Finally all the requirements, procedural rules and technical specification of e-invoicing are shared with the public.

First phase

The first step focused on generation and archiving, will be effective from December 4th, 2021. The suppliers are required to generate e-invoices (both tax invoices and simplified tax invoices) in the electronic and structured format. There is also required to store e-invoices electronically. Electronic invoices must include all mandatory fields in accordance with the VAT regulations in addition to the VAT identification number of the buyer (if the buyer is a registered VAT taxpayer) and a QR code.

Second phase

The second phase – integration, which has been set to January 1st, 2023 – includes the transmission of e-invoices with the ZATCA system by using an application programming interface. All electronic invoices have to be generated in XML or PDF/A-3 format. Additionally, all the suppliers’ e-invoicing software are required to be able to generate a universally unique identifier (UUID), cryptographic stamp, hash and QR codes.