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In December 2021 Saudi Arabia will make electronic invoicing mandatory for all in country taxpayers. The implementation of the electronic invoicing system, named “FATOORAH” will commence on December 4th and will be implemented in two phases.
In this article

Phase One will commence from 4 December 2021 and will focus on e-invoicing generation and saving enforcement, with Phase Two commencing from 1 January 2023 aimed at integration enforcement which will be implemented in phases.

What is E-lnvoicing (FATOORAH)?
Electronic invoicing is a procedure that aims to convert the issuing of paper invoices and notes into an electronic process that allows the exchange  and processing of invoices, credit notes & debit notes in a structure electronic  format between buyer and seller through an integrated electronic solution.

What is an electronic invoice?
A tax invoice that is generated in a structured electronic format through electronic means. A paper invoice that converted into an electronic format through coping,  scanning, or anti other method is not considered an electronic invoice.

Tax Invoice
An invoice that is usually issued by a Business to another Business (B2B), containing all tax invoice elements.

Simplified Tax Invoice
An invoice that is usually issued by a Business to consumer (B2C) containing all simplified tax invoice elements.

How does E-lnvoicing (FATOORAH) work?
E-lnvoicing will be rolled-out in two phases in KSA (more details about the phases here).

For the first phase, enforceable as of December 4th, 2021, for all taxpayers (excluding non-resident taxpayers), and any other parties issuing tax invoices on behalf of  suppliers subject to VAT, electronic invoice issuance will be very similar to today, with  invoices issued through a compliant electronic solution and including additional fields  depending on the type of the transaction.

Taxpayers are required to generate and store compliant  invoices and notes using compliant e-invoicing systems.

 

How to comply with Phase one?

1. Use compliant E-invoicing system
Taxpayers must equip themselves with an E-invoicing system complying with Phase One  requirements. Taxpayers may approach their solution provider or internal technical teams to  ensure their e-invoicing system are compliant with ZATCA requirements.

2. Generating and storing E-invoices
Taxpayers must generate electronic invoices using compliant e-invoicing systems. Manual and  hand-written invoices will no longer be considered as compliant tax invoices.

3. Ensure all elements of the tax invoice are fulfilled
Taxpayers must equip themselves with an E-invoicing system complying with Phase One requirements. Taxpayers may approach their solution provider or internal technical teams to  ensure their e-invoicing system are compliant with ZATCA requirements. In addition, developers and subject matter experts may visit ZATCA’s website to view all the requirements (business, technical, security, etc.). Taxpayers must generate electronic invoices using compliant

e-invoicing systems. Manual and hand-written invoices will no longer be considered as  complaint tax invoices. Generation of E-invoices must include all fields in accordance with VAT  regulations in addition to:

Tax Invoice
The VAT number of the buyer if the buyer is a registered VAT taxpayer. QR Code can be added (Optional).

Simplified Tax Invoice
A mandatory QR Code generated by the taxpayer’s E-invoicing solution in accordance with ZATCA’s specifications.

To discuss your implementation and compliance with the system contact Adel Daglas