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Zatca E-Invoicing

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What is e-invoicing?

 
What is E-Invoicing ?

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, and debit notes in a structured 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 converted into an electronic format through coping, scanning, or any other method is not considered an electronic invoice.
 
Tax Invoice
An invoice, usually issued by a business to another business (B2B), contains all tax invoice elements.
 
Simplified Tax Invoice

Business-to-consumer (B2C) usually issues an invoice with all simplified tax invoice elements.

How does e-invoicing (FATOORAH) work?
E-invoicing will be rolled out in two phases in KSA (more details about the phases here).
For the first phase, enforced 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 invoices generated before December 4th, 2021, with invoices issued through a compliant electronic solution and including additional fields depending on the type of the transaction.
 
For the second phase, enforceable starting January 1st, 2023, in waves, the electronic solution must be integrated with ZATCA’s systems and e-invoices should be generated in the required format.

Roll Out phase

E-INVOICING IMPLEMETATION IN KSA

PHASE 1  (as of December 4th, 2021)
Phase 1, the generation phase, will require taxpayers to generate and store tax invoices and notes through electronic solutions compliant with Phase 1 requirements.
Phase 1 is 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.
 
PHASE 2 ​ (enforceable starting January 1st, 2023 in waves) 
Phase 2, known as the integration phase and rolled out in waves by targeted taxpayer groups, will involve introducing Phase 2 technical and business requirements for electronic invoices and electronic solutions and integrating these electronic solutions with ZATCA’s systems.
ZATCA will notify taxpayers of their Phase 2 wave at least six months in advance, and it is rolled out in waves by taxpayer groups, as shown in the table.
1. What are e-invoicing enforcement dates?

​E-invoicing will be implemented in two phases: 

- Phase One, known as the Generation phase and enforceable as of December 4, 2021. 
- Phase Two, known as the Integration phase and enforceable starting from January 1, 2023 and implemented in waves by targeted taxpayer groups. Taxpayers will be notified by ZATCA on the date of their integration at least 6 months in advance.
2. Some requirements are technical, how can I prepare for e-invoicing?

The technical requirements are typically implemented by solution providers (e.g. cash register vendors, software vendors) or the internal technical teams for in-house built solutions. Taxpayers may approach a solution provider or their internal technical teams to acquire or upgrade to a compliant electronic system; and make sure they are generating compliant invoices starting from December 4th, 2021.​

3. Can anyone access sandbox and FATOORA portal?

No, Sandbox can be accessed by anyone, but FATOORA production system can be accessed only by taxpayers using Taxpayer portal credentials (ERAD credentials).​

4. Should invoice be in English or Arabic?

All the data fields that are visible on human readable form of the invoice must be in Arabic. VAT Regulations require the Tax Invoices and Simplified Tax Invoices (along with corresponding credit notes or debit notes) to be in Arabic mandatorily.  Invoice can be bilingual and include English as well. ​​

5. Is e-invoicing mandatory?
  • ​E-invoicing applies to all persons subject to VAT and any other parties issuing tax invoices on behalf of suppliers subject to VAT.
  • Non-resident taxable persons for VAT purposes are excluded.​​
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