Saudi businesses subject to E-Invoicing regulations must comply with ZATCA’s requirements across two implementation phases: Generation Phase (2021) and Integration Phase (2023). These rules ensure that businesses generate, store, and report tax invoices electronically while maintaining security, transparency, and accuracy. Businesses must also follow data storage, security, and integration guidelines while avoiding prohibited functionalities in their E-invoicing solutions.

Key Benefits

1. Regulatory Compliance: Ensures businesses meet ZATCA’s e-invoicing regulations and avoid penalties.
2. Operational Efficiency: Automates tax invoice generation and storage, reducing errors.
3. Seamless Tax Audits: Ensures proper record-keeping for easier compliance verification by auditors.
4. Prevention of Fraud & Tax Evasion: Enhances invoice integrity through cryptographic stamping and real-time reporting.
5. Integration with FATOORA Portal: Ensures seamless invoice clearance and reporting via API.
6. Real-Time Invoice Validation: Prevents incorrect or fraudulent invoices before they are shared with buyers.
7. Improved Business Scalability: Enables smooth digital transformation and compliance with future regulatory updates.
8. Security & Data Protection: Mandates cryptographic stamps, UUIDs, and protected invoice logs to prevent unauthorized modifications.
9. Transparency & Accuracy: Requires sequential, timestamped invoices to prevent discrepancies.
10. Avoidance of Penalties: Helps businesses adhere to VAT laws, avoiding fines and legal risks.

Key Features

1. General E-Invoicing Obligations

• Electronic Tax Invoices & Notes: Businesses must generate and store tax invoices electronically.
• Timely Compliance: Invoices must be issued within the deadlines set by VAT regulations.
• Use of Compliant E-Invoicing Solutions: Businesses must adopt ZATCA-approved solutions.
• Data Retention: Electronic invoices and related data must be archived as per VAT laws.

2. Phase One – E-Invoicing Generation Phase (Effective December 4, 2021)

• Electronic Invoice Generation: Businesses must issue invoices digitally.
• Mandatory Fields: All required invoice details must be included.
• No Fixed Format: Invoices can be stored in various formats.
• Optional QR Code: QR codes are recommended but not mandatory.
• No Cryptographic Stamp Requirement: Security stamps are not required in this phase.
• No Device Registration: Businesses do not need to register their invoicing devices.

3. Phase Two – E-Invoicing Integration Phase (Started January 1, 2023, in Waves)

• Additional Compliance Fields: Businesses must include mandated security and integration fields.
• Mandatory XML Format: All invoices must be generated in XML format.
• Invoice Archiving: Must comply with VAT retention requirements and be accessible to ZATCA.
• QR Code Requirement: Must include additional invoice details for validation.
• Cryptographic Stamp Requirement: Ensures security and prevents unauthorized modifications.
• FATOORA Portal Registration: Businesses must register their invoicing solutions on ZATCA’s FATOORA Portal.
• UUID & Hashing: Each invoice must include a Unique Identifier (UUID) and hash value for verification.
• Internet Connectivity Requirement: Invoicing solutions must be internet-enabled for reporting.
• Real-Time Clearance via API: Tax invoices must be submitted, validated, and cleared before being sent to buyers.
• Simplified Tax Invoice Reporting: These invoices must be reported to FATOORA within 24 hours.

4. Additional Compliance Obligations

• Report Technical Issues: Businesses must notify ZATCA of any system failures that impact e-invoice generation.
• Use Only Approved Solutions: Only ZATCA-compliant invoicing systems are permitted.
• Device Registration: All E-invoice solution units must be registered with ZATCA.
• Protect Cryptographic Stamps: Security keys must be safeguarded against unauthorized use.
• Cooperate with ZATCA Auditors: Businesses must provide invoice data during tax audits.

5. Prohibited E-Invoicing Functions

To prevent fraud and ensure compliance, E-invoicing solutions must NOT:

• Allow anonymous access or default passwords.
• Permit alteration or deletion of generated invoices or logs.
• Generate non-sequential logs or reset invoice counters.
• Operate with multiple invoice sequences simultaneously.
• Modify timestamps or allow unauthorized time changes.
• Export stamping keys, which are critical for invoice security.

By adhering to these compliance requirements, businesses in Saudi Arabia can ensure seamless e-invoicing operations, secure transactions, and full VAT compliance while avoiding penalties. 🚀