All About Simplified e-Invoices in KSA

Simplified electronic invoices are specially designed invoices for instant Business-to-Consumer (B2C) transactions where the buyer can not claim input VAT deductions. In general, these types of invoices exclude the buyer’s details. For instance, these invoices might be issued by retail shops, grocery stores, hotels, transport hubs, sports venues, etc., where the end-user is a consumer.

However, the buyer’s details will form part of a simplified e-invoice in cases such as medical and educational services subject to tax according to special treatment from the Authority.

Who is liable to issue simplified e-invoices?

All taxable individuals (except non-resident taxable individuals), who are subject to e-Invoicing Regulations, must issue simplified e-invoices in case of B2C transactions. Such persons are:

• A resident of Saudi Arabia
• Third-party who issues tax invoices on behalf of the taxable person

However, e-invoices are NOT required to be issued in the following cases:

• Exempt supplies
• Import of goods
• Supplies subject to reverse charge

How to issue simplified e-invoices?

Under the first phase, a simplified e-invoice must be issued and shared with the customers at the point of sale (POS), and a copy should be subsequently archived and stored. The applicable taxpayer can simply share the e-invoice with customers without further reporting to Zakat, Tax and Customs Authority (ZATCA).

Under the second phase, which shall commence from 1^st January 2023, simplified e-invoices must be reported to the Authority within 24 hours. To do so, applicable businesses shall integrate their ERP/POS systems with the Fatoora portal launched by ZATCA.

Example: Al Salim operates three retail stores and is registered under VAT issuing manual invoices for sale to his customers. During phase 1 of KSA e-invoicing from 4^th December 2021, Al Salim will need to issue simplified e-invoices with a QR code through a compliant e-invoicing solution and store and archive such invoices. However, under phase 2, such invoices must be reported to ZATCA within 24 hours of the sale.

Difference between current simplified invoices and simplified e-invoices

Simplified e-invoices under phase 1 are similar to regular simplified invoices with an additional QR code. ZATCA has not prescribed any specific format for such invoices. Though it mandated the fields to be mentioned in a simplified e-invoice in the generation and additional fields to be included in the integration phases.

Here is a sample of what a simplified e-invoice should be like:

Key fields to be included in simplified e-invoice

Each simplified e-invoice generated by a solution must include certain fields like:

S.No.	Field Name	Description	Phase
1	UUID	A unique number used to identify an invoice	Integration (Phase 2)
2	Cryptographic Stamp	Automatically generated by the e-Invoicing Solutions and are not visible on the invoice	Integration (Phase 2)
3	Previous Invoice Hash	The previous invoice hash must be included within the subsequent e-invoice.	Integration (Phase 2)
4	QR Code	QR Code generated should be capable of showing specific minimum fields such as: a. Seller’s name b. VAT registration number c. Timestamp d. VAT total e. Invoice total with VAT	Generation and Integration (Both Phases)

What needs to be done as a retail business owner?

Step 1: Businesses must first identify whether e-Invoicing Regulations apply to them.

Step 2: If e-Invoicing Regulations are applicable, the taxpayer needs to identify those transactions that will be impacted by it.

Step 3: The taxpayer must select a compliant e-invoicing solution that can either be purchased or developed in-house. It should be ensured that it meets ZATCA’s requirements.

Step 4: e-Invoices should be issued in electronic mode only for all applicable transactions. Such invoices should be stored for future use.