Taxpayer’s Obligations under e-Invoicing in KSA

Updated on :  

08 min read.

e-Invoicing is a newly introduced invoicing system that aims at digitising invoices issued in the Kingdom of Saudi Arabia (KSA). Though the process has gone online, there are many e-invoicing obligations that taxpayers need to take care of.

Applicability of e-Invoicing in Saudi Arabia

To understand e-invoicing obligations, it is essential to understand their applicability. e-Invoicing regulations are applicable to-

  • All resident taxpayers who are subject to Value Added Tax (VAT) under current regulations
  • Others issuing tax invoices on behalf of the VAT registered suppliers

 e-Invoicing is applicable to the following supplies:

  1. Supplies that are subject to standard VAT rate and zero VAT rate
  2. Export of goods from Saudi Arabia
  3. Intra-GCC supplies as per the Agreement, VAT Law and VAT Implementing Regulation
  4. Nominal supplies as per the Agreement, VAT Law, and VAT Implementing Regulation
  5. Advances received before the actual supply of goods or services

However, Zakat, Tax and Customs Authority (ZATCA) has exempted the following transactions from e-invoicing:

  1. Exempted supplies or payments received on them
  2. Taxable supplies are subjected to a reverse charge mechanism
  3. Import of goods into the KSA

Obligations of the Persons Subject to the e-Invoicing Regulations

There are certain e-invoicing obligations that all VAT-registered taxpayers need to adhere to under the new e-invoicing regime in the Kingdom of Saudi Arabia (KSA).

  1. All the invoices must be generated in electronic form, which applies w.e.f. 4th December 2021 within the time allowed under current VAT Regulations using verified e-invoicing utility/solution.
  2. Taxpayers need to comply with all the requirements set forth under e-Invoicing Regulations, including technical specifications and other procedural requirements like having QR codes, UUID and other components on the invoice.
  3. The taxpayers are also advised to comply with all the deadlines strictly. Thus, they need to shift upon a proper e-invoicing solution well before the commencement of Phase 1.
  4. Such e-invoices and electronic credit/debit notes need to be stored digitally for the required period specified in VAT Regulations.
  5. Taxpayers need to notify the ZATCA in case of any incidents, technical error or emergency matters which hinders their ability to generate e-invoices. Also, the taxpayers need to follow the procedures as determined by the ZATCA in such cases.
  6. Taxpayers should not be using an e-invoicing solution that is not compliant with the specifications and requirements specified in the guidelines.
  7. Taxpayers must register the units used for generating simplified tax invoices and their associated electronic credit/debit notes with ZATCA.
  8. The Cryptographic Stamp Identifiers and their associated components, which are mandatorily required on e-invoices, need to be preserved safely to protect them from copying or illegal usage and should be strictly used for intended purposes only.
  9. Under Phase 2, which shall commence from January 2023, the taxpayers will need to integrate their system with the ZATCA’s system to generate e-invoices. 
  10. Also, the e-invoices and related electronic credit/debit notes generated need to be shared with the ZATCA in XML Format.

There might be other e-invoicing obligations that the ZATCA may intimate from time to time. Thus, taxpayers need to keep themselves up to date with such amendments.

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