Electronic Invoices in Saudi Arabia
The Saudi Arabian General Authority of Zakat and Tax (GAZT) regulated the use of e-invoices in the Electronic Invoicing Regulation. In the context of regulations in the ‘E-invoicing Regulation‘ published by GAZT, as of December 4, 2021, the use of e-invoices will be mandatory in the whole country.
Who should use electronic invoices in Saudi Arabia?
The new regulations will be implemented in the B2B area and will affect taxpayers residing in the country. It will also affect third parties who issue invoices on behalf of a taxpayer subject to VAT.
Definitions and technical solutions determined by GAZT in the context of E-Invoicing:
- Electronic Invoice: A tax invoice that is generated in a structured electronic format through electronic means.
- Electronic Notes: Debit and credit notes that must be issued in accordance with the VAT Law and its Implementing Regulation, and which are issued in a structured electronic format through electronic means.
- Integration of electronic invoicing systems: Integrating the systems for issuing electronic invoices and electronic notes with the Authority systems with the aim of sharing data and information in accordance with the controls, technical requirements and procedural rules that will be approved and issued by a Governor resolution based on the provisions of this Regulation.
- The technical solution used to issue Electronic Invoices and Electronic Notes shall be able to connect with external systems using the Application Programming Interface (API).
- The technical solution used to issue Electronic Invoices and Electronic Notes is tamperproof and should include a mechanism that allows to detect any tampering performed by the user or any other party.
Estimated deadlines for e-invoicing to start
GAZT has determined two stages for e-invoice setup. The first will be the preparation phase, the second will be the introduction of the new invoicing system.
Phase: Within a maximum period of 12 months from the approval of billing arrangements, companies are expected to receive technical training to create electronic invoices, credit and debit notes in a structured format. These documents should be created through an electronic solution. In addition, they must have electronic storage capacity.
Stage: By 4 December 2021, all companies subject to VAT must begin to issue and store electronic invoices, credit and debit notes to justify the sale of goods and services. The issue will be made through the system approved by GAZT for electronic information exchange.
On the other hand, GAZT announced that the requirements, details and methods for the integration of the e-Invoice solution, as well as the implementation stages, will be issued within a maximum of 180 days from the publication date of the said Regulation.
The e-invoicing system will be a control mechanism to prevent the informal economy and tax evasion in the country. It also helps to promote fairer competition in the market and guarantee consumer rights. In this respect, Saudi Arabia’s value is expected to improve in the global market context.