Saudi Arabia: Guidelines and standards for e-invoices

The Zakat, Tax and Customs Authority (ZATCA) on 28 May 2021 published guidelines and standards regarding the implementation of an electronic invoicing (e-invoicing) system.

Notably, the “phase two” integration implementation is postponed to 1 January 2023 (from 1 July 2022) whereas the “phase one” issue and storage implementation deadline remains the same, 4 December 2021.

The first phase of e-invoicing—the “issue and storage” phase—starts 4 December 2021 and requires taxpayers to issue and store electronic invoices and notes.

The second phase—the “integration” phase—will begin 1 January 2023 and will require taxpayers to transmit electronic invoices and notes and share these documents with ZATCA for electronic verification and stamping.

The ZATCA on 28 May 2021 published the following guidance for the phase one implementation of e-invoicing:

• The controls, requirements, technical specifications, and procedural rules to implement the provisions of the e-invoicing regulations
• The e-invoicing simplified guidelines
• The e-invoicing phase one FAQs
• Electronic invoice XML implementation standards
• Electronic invoice security features implementation standards

The recently published guidelines and standards provide an overview of essential terms and processes to implement e-invoicing, and cover the definitions of e-invoicing, e-invoice, tax invoice, simplified tax invoice, e-invoicing solutions and QR code—all of which are essential for understanding the technical requirements. The guidance also covers the use of an electronic invoicing system, the generation and storage of electronic invoices, and the need to determine that all elements of the tax invoice are present.

For specialists and developers of invoicing systems, ZATCA has recommended a review of the technical specifications.

What must be done in phase one:

• Updating or installing new invoicing systems
• Adding QR codes to invoices
• Adding the buyer’s value added tax (VAT) registration number if registered for VAT

How e-invoicing will function during phase one:

• The seller issues and saves the invoice through an e-invoicing system that is compliant with the requirements of the first phase.
• The invoice must contain all the items required in a tax invoice.
• The buyer receives a copy of the invoice.

Things to avoid when generating electronic invoices:

• Manual invoicing
• Issuing invoices that do not include the requirements of the ZATCA
• Using a system that does not comply with the e-invoicing requirements issued by the ZATCA
• Deleting electronic invoices after they are issued

What is optional for phase one but will be implemented in phase two:

• Issuing invoices in XML, PDF/A-3 formats
• Implementing anti-tampering features
• Implementing other technical features such as a universally unique identifier
• Integrating with the ZATCA systems

For more information, contact a KPMG tax professional:

Philippe Stephanny | +1 202 533 3082 | philippestephanny@kpmg.com