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What is an E-Invoice?

An invoice issued, stored, amended/modified, and exchanged in an electronic format using an electronic solution (for example, a handwritten invoice that is scanned is not considered an electronic invoice).
These invoices issued within the E-Invoicing project are all Tax Invoices (whether they represent a Tax or a Tax Simplified invoice) that are usually issued as a commercial document to confirm the goods and services provided to the customer and prove the amounts be paid for those goods and services. Therefore, E-Invoices should include and meet all the Tax Invoice requirements.

What are the fields required in the E-Invoice?

E-Invoices include Tax Invoices and Simplified Tax Invoices under the VAT Regulation. As for the Simplified Tax (sale invoices), no specific formula must be followed when issuing them. However, the specific fields required in Simplified Tax Invoices:

  • Type of invoice (Simplified Invoice)
  • If the invoice is issued on behalf of a taxable person, it must be stated that “a third party issued the invoice on behalf of….”
  • Invoice Number
  • QR Code
  • The date the invoice was issued
  • Name and Address of the taxable person
  • Tax identification number of the taxable person
  • Description of goods or services to be sold
  • Price of goods and services to be sold
  • Quantity of goods or services sold
  • Total (Tax Exclusive)
  • Total Tax
  • Total amount (Tax Inclusive)

What are the steps of implementing E-Invoicing?

The implementation of E-Invoicing is divided into two main phases:

The first phase, starting from December 4th, 2021: Should start issuing/generating, and storing e-invoices that include all the requirements of tax invoices using a system (such as a Cashier/POS system). The process involves any taxable individuals/institutions for VAT purposes and anyone who issues tax invoices on behalf of them.

The second phase, starting from January 1st, 2023: Will integrate the system used to issue the E-Invoices with ZATCA’s systems to enable sharing and sending data and info through it.

Who is subject to the Electronic Invoicing Regulation?

All taxable individuals/institutions for VAT purposes (excluding non-residents in Saudi Arabia), and any third party issuing tax invoices on behalf of taxable individuals, must start issuing E-Invoices by December 4th, 2021.

And simply put, to determine whether you are taxable for VAT purposes or required to register as a taxable individual or not:

If you carry on an Economic Activity and your:

Taxable supplies over 12 months exceed SAR 375,000 (the Mandatory VAT Registration Threshold). You must register for VAT.
Taxable supplies over 12 months of SAR 187,500 (the Optional VAT Registration Threshold). You may register for VAT voluntarily.
Taxable supplies are less than SAR 187,500. You are ineligible to register for VAT.
In conclusion, you must issue E-invoices if:

You live in Saudi Arabia and are taxable for VAT purposes.
If you issue tax invoices on behalf of a person who is taxable for VAT purposes.

When do retailers issue E-Invoices?

If you are a retailer who is taxable for VAT purposes, and you serve the end consumer, you will issue E-Invoices for:

Every time you issue a tax invoice when selling to the end consumer. Meaning you will continue to issue tax invoices as you used to. However, instead of issuing them in paper format, you will start issuing them using an electronic solution/system compatible with ZATCA’s requirements.

How does E-invoicing work?

Enforceable as of December 4, 2021
The E-Invoicing model can be summarized as follows:

  • The seller generates and stores the electronic invoice through a compliant e-invoicing system.
  • the E-Invoice should include all the mandatory fields in the tax invoice.
  • The buyer receives a copy of the invoice.
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