Businesses in Saudi Arabia are preparing for a huge digital transformation in tax clearance. According to ZATCA’s new regulations, suppliers will be obligated to implement e-Invoicing. The process is split in 2 phases of implementation – the first will be effective from December 4th, 2021. What does it mean for taxable persons?
Suppliers have only 4 months left to implement a relevant technology and prepare for the the issuance and storage of e-Invoices (also called Fatoorah) in compliant formats. This is a huge digital challenge for taxable persons who are residents in the Kingdom of Saudi Arabia, as well as for customers or any third parties who issue tax invoices on behalf of a taxable resident of Saudi Arabia, according to the VAT Implementation Regulations. The important reason is that the e-Invoicing regulations will significantly reduce VAT leakage, help adapt to a cashless economy, and reduce the shadow economy. The transition process from paper-based to electronic invoices shall reduce fraud and tax evasion.
Steps of Implementation
The first step focused on generation and archiving will be effective on December 4th, 2021. Suppliers are required to generate e-Invoices (both tax invoices and simplified tax invoices) in electronic and structured formats; and are 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 a buyer (if the buyer is a registered VAT taxpayer) and a QR code. The second phase – integration, which has been set to January 1st, 2023 – includes the transmission of e-Invoices with the ZATCA’s platform through the use of an Application Programming Interface (API). All electronic invoices must be generated in either XML or PDF/A-3 formats. Additionally, suppliers’ e-Invoicing software is required to be able to generate a universally unique identifier (UUID), a cryptographic stamp, a hash and a QR code.
E-Invoicing – what does it mean exactly?
E-Invoice is an invoice that is issued, processed, and received electronically – among different entities, like buyers and suppliers. There are several benefits of e-Invoicing. The e-Invoicing process replaces manual tasks with automated business rules and actions increasing efficiency, minimising errors, and helping businesses comply with the e-Invoicing legislation. Many countries in the world have implemented E-Invoicing. There are some technical frameworks and sets of standards that help different organisations exchange e-Invoices regardless of the specific ERP systems they use. The question for businesses is whether to choose a well-experienced partner who will help implement a new digital solution or make an internal development. Since 2002, Infinite IT Solutions has been delivering IT solutions for companies across Europe, the Middle East, Africa, and Asia. There is a special application dedicated comply with the requirements of national e-Invoicing platforms such as ZATCA – Infinite e-Invoicing Suite.
How to adopt electronic invoicing?
Infinite e-Invoicing Suite maintains compliance with regulatory requirements in Saudi Arabia as regards format, content, e-Signing, embracing both models reporting, and clearance. It is a flexible, easy-to-use micro service that allows you to streamline and automate all your AP/AR invoicing processes – no matter the size or technical maturity of your business. The solution has been created to address the challenges of the ongoing digital transformation and is fully compliant with the latest data exchange regulations announced by ZATCA and modern data transfer standards. Thanks to its numerous functional features such as Self-Billing, 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 business needs in Saudi Arabia.
Certainly, Electronic Invoicing helps develop business in a much more transparent way, make it more competitive, and be in line with global best practices. Thanks to the regulations, Saudi Arabia will be one of the most advanced countries in digital among Gulf nations in a few years’ time– says Ammar Hamednalla, Infinite IT Solutions.
Our long cooperation with businesses in the digital transformation across the Middle East, especially in the UAE, makes us the perfect e-Invoicing partner for the journey, which has just begun in the Kingdom– says Ammar Hamednalla, Infinite IT Solutions.
Benefits for business with Infinite e-Invoicing
Electronic invoicing as a digital solution combines effective communication with both private and public entities, and a guarantee of a safe transformation. The solution enhances the security of data exchange, shortens procure-to-pay cycles, and reduces operation costs. Thanks to the digital automation human errors are significantly minimized which translates to a reduced number of incorrect or incomplete documents. Infinite e-Invoicing also has a positive impact on the environment as an ambassador of paperless ecosystems.