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e-invoicing in Saudi Arabia
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What is e-invoice?
E-invoice is an invoice that is issued, received and processed electronically. E-invoicing can help replace manual tasks with automated business rules and actions to increase efficiency, minimise error handling, and help businesses comply with e-invoicing legislation.
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E-invoicing mandate in KSA
Mandatory e-invoicing in Saudi Arabia – what does it mean exactly
The Zakat, Tax and Custome rs Authority (ZATCA), formerly known as the General Authority of Zakat and Tax (GAZT), announced that e-invoicing will become mandatory in the Kingdom of Saudi Arabia, effective 4 December 2021. This means that suppliers will no longer be allowed to generate or store paper or PDF invoices. According to the final rules, the Saudi Arabia e-invoicing system will have two main phases. Your businesses should be prepared for a range of possibilities, including the possibility where approval may be required for individual invoices and transactions.
Initial requirements of technical E-invoicing solutions:
- Must be accesible online
- Must allow access by external systems through APIs
- Must apply control mechanisms that guarantee the authenticity and integrity of the information
- Must comply with security and cybersecurity requirements in the country
- The use of invoices in PDF format, whether scanned or in any other format besides the structured file, will not be allowed once e-invoicing becomes mandatory
Essential knowledge about einvoicing changes
What you need to know?
The e-invoicing process called FATOORAH applies to taxable persons who are residents in the Kingdom of Saudi Arabia, as well to the customers or any third parties who issue a tax invoice on behalf of a taxable person who is a resident in the Kingdom according to the VAT Implementing Regulation.
- Issuing and keeping electronic invoices, debit and credit notes: an electronic invoice is generated and stored in data structured files. Paper, unstructered data files, PDF images or scan copies of images are not considered e-invoices
- It will come into effect in two stages: generation from 4th December 2021, and integration from January 2023
- E-invoices must be issued in Arabic (additional languages are permitted, in addition to the required Arabic).
- Currently, GAZT has indicated that a two-phased implementation approach for electronic invoices will be followed.
- The first phase indicates that businesses should be able to generate and store tax invoices and notes in a structured electronic format issued through an electronic solution, which suggests no direct interaction with the tax authority.
For who is dedicated einvoicing in KSA
Who is Required to Invoice Electronically in Saudi Arabia?
The new regulation applies to B2B transactions and will affect all resident, taxable persons in Saudi Arabia. It will also affect third parties issuing invoices on behalf of a taxpayer subject to VAT. Companies that are not residents in the country are excluded.
Electronic invoice - future of business in Saudi Arabia
Paper invoice vs e-invoice
An e-invoice is issued, transmitted, received and processed electronically. E-invoicing is an integrated solution that enables a fully automated flow from one company’s ERP system to another.
-Manual handling – material costs – delivery costs -print – create invoice – archive – manual handling – validation – verification – authorisation – matching – errors – slow delivery – time consuing – involve workers
+Traceable delivery + error free + fastest process + operational savings + increased financial control
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how to adapt einvoicing
Fulfill ZATCA regulations with Infinite e-invoicing go to solution
Our solution maintains compliance with regulatory requirements in Saudi Arabia for format, content, e-signature, reporting or clearance. Infinite e-Invoicing is a powerful, easy-to-use platform that allows you to streamline and automate all of your AP/AR invoicing processes – no matter the size or technical maturity of your business.
Created to address the challenges of the ongoing digital transformation, our solution is fully compliant with the latest data exchange regulations and modern data transfer standards.
Thanks to its many groundbreaking functionalities such as Self-Billing, e-Archive, Electronic Signature, Data Validation, Format Conversion, and Multichannel Distribution, it allows you to manage data in a way that is both highly effective and in line with your needs.
why choose us
Infinite e-invoicing benefits
Fast & secure data exchange
Remove human error
Reduced number of incorrect/incomplete documents
Low operational costs
Positive impact on the environment (CSR)
Improved cash management
what you get
Additional features of our solution for e-invoicing
what the new ZATCA process looks like
ZATCA e-invoicing process
Watch the latest episode of Digital Talks Middle East
ZATCA e-invoicing in Saudi Arabia
Topics covered in the video:
- Are all tax payers subject of e-Invoicing for PHASE 2?
- On which format we will be sharing our invoice to your middleware?
- How to handle invoice in case of system failure?
and many other.
QUESTIONS ABOUT ELECTRONIC INVOICING? WE HAVE ANSWERS
Most frequently questions
Why should i implement e-invoicing?
There are multiple reasons in favour of implementing electronic invoicing. The main ones are:
- The new regulations announced by ZATCA making the e-invoicing mandatory from December 4th, 2021
- Financial transparency
- Compliance with e-invoicing regulations
- Reduced procure-to-pay cycles
- Automated invoice registration via API / EDI
- Reduced operational costs
How long does it take?
The deployment of e-invoicing solution takes on average from 2 weeks to 6 weeks. The ready-to-deploy connectors shall just need to be customised towards a business specification as they are already configured meeting the ZATCA’s regulations.
Are there any penalties if i don't adopt e-invoicing?
There are currently no penalties applicable. However, the non-compliance penalties stipulated in the VAT Law will be applicable at the end of the grace period (December 4th, 2021).
Who is subject to the Electronic Invoicing Regulation?
All taxable persons for VAT purposes (excluding non-resident taxable persons), in addition to any other party issuing tax invoices on behalf of a supplier subject to VAT.
How will Electronic invoicing be implemented?
The implementation of Electronic Invoicing has two main phases:
1. Phase One: Generation and storing of tax invoices and electronic credit or debit notes in a structured electronic format issued through an electronic solution, and including all the requirements of tax invoices.
2. Phase Two: Integration of the taxable persons’ electronic solution used to generate electronic invoices and credit or debit notes, with ZATCA’s systems, with the objective of sharing data and information.
What actions should be taken now to start the Electronic Invoicing journey?
The first step is to determine whether the Electronic Invoicing Regulation applies to you, as well as assessing how ready you are to generate electronic invoices as per the minimum requirements outlined in the Regulation.
The second step is to determine whether you have capabilities to meet the regulations with your internal resources who shall complete the deployment within the grace period (December 4th, 2021).
The alternative is to engage a system integrating company like Infinite IT Solutions which provides the 100% compliant e-invoicing solution. The deployment is arranged from 2 to 6 weeks on average.
What is meant by “Electronic Means” in the definition of Electronic Invoice in the Electronic Invoicing Regulation?
Any device, electronic solution, or application used for the generation of electronic invoices and credit or debit notes that meets the following minimum requirements:
- Ability to connect to the Internet.
- Compliance with the requirements and controls for data & information security or Cybersecurity in the Kingdom.
- A tamperproof solution, which allows the detection of any tampering performed.
- Ability to integrate with external systems using Application Programming Interface (API).
How can I establish Application Programming Interface (API) to connect with the ZATCA’s platform?
The first step is to determine whether you have capabilities to set up the connection and meet the regulations with your internal resources who shall complete the deployment within the grace period (December 4th, 2021).
The alternative is to engage a system integrating company like Infinite IT Solutions which provides the 100% compliant e-invoicing solution via ready-to-deploy API connectors. The deployment is arranged from 2 to 6 weeks on average.
How are Electronic Invoices recorded? Are there any requirements for record-keeping purposes?
Provided that the Electronic Invoice is considered a tax invoice in accordance with the provisions of the VAT Law and its Implementing Regulation, all the provisions that apply to tax invoices shall apply to electronic invoices, including the rules of keeping (storing) tax invoices stipulated in the VAT legislations, and specifically Article (66) of the VAT Implementing Regulation.
The archiving periods of e-invoices:
- 6 years (standard assets)
- 11 years (moveable and intangible capital assets)
- 15 years (real estate)
Infinite IT Solutions provides a long term, 100% ZATCA-compliant archiving service. The authenticity of invoice origin and the integrity of invoice content are guaranteed. Invoice data cannot be altered thanks to the qualified time stamp.
What languages are available for dealing and issuing an Electronic Invoice?
An electronic invoice needs to be issued in Arabic; however, other languages can be used in addition to the Arabic language.