All About e-Invoicing in the Kingdom of Saudi Arabia (KSA)

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The Kingdom of Saudi Arabia (KSA) started focusing on several initiatives for the digitalisation of the economy. The General Authority of Zakat and Tax (GAZT), merged with Zakat, Tax and Customs Authority (ZATCA), intended to introduce e-invoicing in KSA and published a draft amendment on 17th September 2020 in line with Value Added Tax Implementing Regulations. The draft covered aspects of e-invoicing rules.

e-Invoicing (Fatoorah) in KSA

The people of KSA refer to e-invoicing widely as Fatoorah. e-Invoicing is a procedure that aims to convert issuing invoices from paper into electronic mode. The e-invoicing process allows exchanging and processing invoices, credit notes, and debit notes in a structured electronic format between buyer and seller using an integrated electronic solution.

All the provisions related to a tax invoice in the VAT legislation will apply to an e-invoice, and any non-compliance will result in penalties from GAZT. Apart from this, the provisions related to proof of electronic transactions and electronic signatures in the Electronic Transactions Law of KSA shall apply to e-invoices and electronic notes issued.

e-Invoicing implementing authority in KSA

The Zakat, Tax and Customs Authority (ZATCA) is the authority for e-invoicing in KSA. GAZT, now known as ZATCA, issued the draft e-Invoicing Regulations in KSA in March 2021. The authority allowed the public and stakeholders to provide their feedback on the e-Invoicing Regulations on or before 17th April 2021. The e-Invoicing Regulations were finally published on 28th May 2021.

The regulations stated all the resident taxpayers should mandatorily be fully equipped to issue, save and modify e-invoices by 4th December 2021. These regulations specify the terms, requirements, and conditions of electronic invoices and electronic credit and debit notes.

What is an e-invoice in KSA?

It is an invoice issued and saved in an electronic format generated through an electronic system and contains the tax invoice requirements. It is clarified that a handwritten or scanned invoice will not be considered an electronic invoice. There are two types of tax invoices:

  • Tax invoice: It is the invoice issued by a Business to another Business (B2B), containing all the elements of a tax invoice, especially the VAT registration number of buyer and seller.
  • Simplified tax invoice: An invoice often issued by a Business to consumer (B2C) containing the main elements of a simplified tax invoice.

The e-invoices should be issued in the Arabic language. However, additional languages are permitted, apart from the Arabic language.

Who has to issue an e-invoice in KSA?

All taxable individuals living in the KSA, the customers and the third parties who issue invoices on behalf of any taxable individuals must use the electronic invoices. All VAT regulations applicable to tax invoices, credit notes and debit notes continue to apply for e-invoices as well. However, non-resident taxpayers under VAT are excluded from the scope of e-invoicing.

Phases of e-invoicing in KSA

The ZATCA is implementing e-invoicing in two phases:

Phase 1: Generation

This phase is known as the ‘Generation Phase’, in which taxpayers have to generate and store tax invoices and notes through electronic solutions compliant with Phase 1 requirements. Implementation of this phase will start from 4th December 2021. It is to be compiled by all taxpayers (excluding non-resident taxpayers) and any other parties issuing tax invoices on behalf of suppliers subject to VAT.

The procedures of issuing e-invoices will be similar to issuing invoices at present but through a compatible electronic billing system. The e-invoice shall include all the required items based on the type of invoice.

Phase 2: Integration

This phase is known as the ‘Integration Phase’ and rolled out in waves by the targeted taxpayer group. Phase 2 will begin from 1st January 2023, and ZATCA will notify taxpayers of their wave at least six months in advance.

This phase involves introducing technical and business requirements for electronic invoices and electronic solutions and integrating with ZATCA’s systems. In this phase, taxpayers’ must integrate their systems of issuing electronic invoices and debit and credit notes with ZATCA’s systems to share data and information.

The seller has to get the e-invoice ‘cleared’ by the authority to share it with the buyers and make that e-invoice legal and valid. However, in the case of simplified e-invoices, the taxpayer can ‘report’ them with ZATCA within 24 hours from the time of generation.

Benefits of e-invoicing for KSA

The following are the few reasons for introducing e-invoicing or Fatoorah in KSA:

  • Transparency in commercial transactions helps the government ensure better tax compliance.
  • Electronically generated invoices help maintain better accuracy and effortless transactions with customers.
  • e-Invoicing implementation increases efficiency in transactions for both businesses and governments owing to the data standardisation, seamless trade, speedy communication, faster payments and reduced costs.
  • Generation of invoices electronically will result in reducing the usage of paper invoices and is environment friendly.
  • e-Invoicing allows the government to detect fake invoices or related malpractices and keep a check on the shadow economy.

All Articles

  1. This video explains all about UUID, including uses, e-invoicing regulations, who must generate, format, validity, and how to obtain it.
  2. This article explains all about VAT registration in KSA, including who should register, special cases, steps to register, VAT deregistration.
  3. This article explains all anti-tampering measures in a KSA e-invoicing solution applicable from generation and integration phases.
  4. An ideal e-invoicing solution in KSA should not have some prohibited functionalities. This article explains the phase-wise prohibited functionalities.
  5. Data storage and archival requirements are separately listed down in the e-Invoicing Regulations defined by the ZATCA in Saudi Arabia. Know more.
  6. This article explains all the e-invoicing requirements in KSA, including format, content, integration and mandatory security requirements.
  7. This article explains all about VAT return filing in KSA, including who has to file, types, how to file, amendments, changing filing period.
  8. This article explains the basics of KSA VAT law, including registration, types of supplies, input tax deduction, records, returns, appeals and penalties.
  9. This article explains the obligations that all VAT-registered taxpayers need to adhere to under the e-invoicing regime in the KSA.
  10. This article explains all about the ZATCA portal, including e-services, rules and regulations, e-invoicing, integrated tariffs, knowledge centre etc.
  11. This article explains the mandatory technical functionalities for 1st phase of e-invoicing in KSA, such as format, structure, data processing, security etc.
  12. This article explains all about QR codes on e-invoices in KSA, including purpose, applicability, contents, and generation.
  13. This article explains the impact of e-invoicing on third-party billing in KSA, including how it works, requirements, liability and examples.
  14. All taxpayers must adopt ZATCA defined compliant e-invoice solution in KSA. This article includes types, examples and features.
  15. Phase 1 of e-invoicing starts from 4th December 2021 in KSA. This article explains the actions to be taken by taxpayers and readiness steps.
  16. This article explains the mandatory fields in e-invoices such as UUID, cryptographic stamp, identifier, invoice hash, QR code and invoice counter.
  17. This article explains all aspects of simplified e-invoices in KSA including, who is liable, how to issue, current vs proposed process, key fields etc.
  18. e-Invoice has to be generated for self-billing cases in KSA. This article details the procedures, examples and benefits of self-billing under e-invoicing.
  19. The e-Invoicing solution should comply with KSA VAT Regulations. This article explains the key considerations while choosing an e-invoicing solution in KSA.
  20. Clearance and reporting e-invoicing models in Saudi Arabia is important processes that taxpayers must be aware of. It applies to various invoice types in KSA.
  21. The adoption of the e-invoicing system is picking up pace in the Gulf countries. With the Kingdom of Saudi Arabia (KSA) issuing the regulations and announcing the timelines for implementation, the United Arab Emirates (UAE) has also indicated its plans to mandate the system.
  22. KSA Banks can implement the e-Invoicing system by following a step-by-step process. This article gives out Tips for a smooth transition for banks in Saudi.
  23. Scope and applicability of e-invoicing in Saudi Arabia is of importance to know whether or not e-invoicing system applies to a person and a transaction.
  24. KSA e-invoicing FAQ are issued by the ZATCA of the Kingdom of the Saudi Arabia. It is comprehensive and details several scenarios. Read to know more.
  25. As per VAT law in KSA, there are different types of invoices, and the taxpayers have to generate the same type of e-invoices even under e-invoicing.
  26. e-Invoicing phases are divided broadly into two in the Kingdom of Saudi Arabia. The generation phase applies from 4th December 2021. Read more.
  27. e-Invoicing UAE will be implemented soon following Saudi Arabia. Read to know the implementation dates, strategy and tips in the United Arab Emirates
  28. e-Invoicing Regulations are released in the Kingdom of Saudi Arabia or KSA for all the resident VAT taxpayers. Read the article to know what's given in law.
  29. E-Invoicing in Saudi Arabia
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