What is E-Invoicing?
What is E-Invoicing (FATOORAH)?
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 & debit notes in a structure 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 that converted into an electronic format through coping, scanning, or any other method is not considered an electronic invoice.
Tax Invoice
An invoice that is usually issued by a Business to another Business (B2B), containing all tax invoice elements.
Simplified Tax Invoice
An invoice that is usually issued by a Business to consumer (B2C) containing 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 prior to 4 Dec 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 phases
E-INVOICING (FATOORAH) IMPLEMETATION IN KSA
ZATCA has published e-invoicing requirements that will be rolled-out into two main phases in KSA:
PHASE 1 (as of December 4th, 2021)
Phase 1, known as 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 group, will involve the introduction of Phase 2 technical and business requirements for electronic invoices and electronic solutions, and the integration of these electronic solutions with ZATCA’s systems.
ZATCA will notify taxpayers of their Phase 2 wave at least six months in advance, and is rolled-out in waves by taxpayer group, as shown above in the table.
Guidelines
SIMPLIFIED GUIDELINES FOR E-INVOICING
This guide contains the requirements for all taxpayers subject to the E-Invoicing Regulation to prepare and update their invoicing solutions for phase one (generation phase) and phase two (integration phase).
Download from here
E-INVOICING DETAILED GUIDELINES
This guide contains requirements for E-Invoicing (FATOORAH) as well as technical and security requirements for taxpayers and E-Invoicing providers. It also includes detailed technical requirements such as invoice specifications, data dictionary and security specifications for the E-Invoicing application.
Download from here
FATOORA PORTAL USER MANUAL
This user manual contains the steps of using Fatoora portal to onboard and integrate the e-invoicing solutions.
Download from here
E-INVOICING DETAILED TECHNICAL GUIDELINE
This guideline includes the technical requirements for the e-invoicing solutions.
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DEVELOPER PORTAL MANUAL
Download from here
Main Categories
FAQs
E-invoicing will be implemented in two phases:
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Phase One, known as the Generation phase and enforceable as of December 4, 2021.
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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.
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.
No, Sandbox can be accessed by anyone, but FATOORA production system can be accessed only by taxpayers using Taxpayer portal credentials (ERAD credentials).
Yes, both FATOORA and Sandbox can be accessed from anywhere globally, not only from KSA
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.
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E-invoicing applies to all persons subject to VAT and any other parties issuing tax invoices on behalf of suppliers subject to VAT.
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Non-resident taxable persons for VAT purposes are excluded.
- All Persons subject to the E-Invoicing Regulation must use compliant electronic systems to generate invoices starting from December 4th, 2021. Manual invoices will no longer be considered as compliant invoices.
- E-invoices must include the minimum additional fields (see next question)
- E-invoicing compliant electronic systems should be able to generate QR codes.
- E-invoicing compliant electronic systems must not allow for the prohibited functions specified by ZATCA.
- Please approach your solution provider or your internal technical teams to ensure your electronic systems are compliant with ZATCA requirements. In addition, developers and subject matter experts may visit ZATCA’s website for viewing all requirements (business, technical, security, etc.).
- E-invoices for Phase 1 (4 December 2021) are similar to current invoices, with minimum additional fields:
a. For simplified tax invoices and their associated notes (usually issued for B2C transactions) a mandatory QR code.
b.For tax invoices and their associated notes (usually issued for B2B transactions), an optional QR code and mandatory VAT number of the buyer if the buyer is a registered VAT taxpayer.
- There is no specific file format mandated for Phase 1, however, invoices must include the mandatory fields and must be issued from an electronic system meeting ZATCA’s requirements. In addition, electronic copies of all issued invoices must be stored by the taxpayer.
Yes, the system or solution used for generating and storing the invoices must be able to have an internet connectivity for both phases.
No, integration with ZATCA is not required for Phase One starting December 4, 2021.
Yes, QR code are mandatory for simplified tax invoices (usually issued for B2C transactions) and optionally for tax invoices (usually issued for B2B transactions). QR code is not provided by ZATCA and shall be generated by the electronic system. Please approach your solution provider or technical teams to acquire or upgrade to a compliant electronic systems.
As part of Phase 1 (Generation Phase), the below fields are the minimum required fields that must be shown after scanning a QR code in a simplified tax invoice:
- Seller’s name
- VAT registration number of the seller
- Time stamp of the Electronic Invoice or Credit/Debit Note (date and time)
- Electronic Invoice or Credit/Debit Note total (with VAT)
- VAT total
No, for Phase 1 (December 4, 2021), taxpayers are not required to approve, clear or report invoices to ZATCA.
- Lack of user management capabilities (uncontrolled access) for example:
- Anonymous Access
- Absence of user session management
- Tampering of e-invoices or their associated notes or logs
- Multiple Electronic Invoice sequences
- For additional details on the prohibited functionalities, please refer to Annex (1) “Technical Requirements of E-invoice Generation Solutions” in the resolution.
- Taxpayers should take steps to ensure their E-Invoicing solutions are properly functioning at all time (e.g. battery back-up).
- However, if despite taking necessary steps the taxpayer faces incidents, technical errors or emergency matters which hinder the generation of electronic invoices or electronic notes, the taxpayer must:
- Communicate immediately with their solution provider and technical teams to resolve the issue, and keep evidence of their communication (e.g. e-mail)
- Notify ZATCA immediately of the failure through this link
Taxpayers should notify ZATCA only of incidents in which they are no longer able to generate e-invoices. Taxpayer with multiple E-Invoicing solutions are not required to notify ZATCA of the failure of a single solution in case they are still able to generate e-invoices using another e-invoicing solutios.
After notifying ZATCA, taxpayers may continue to conduct business during solution failure to their customers. Any invoices or notes related to transactions conducted during the solution failure must be generated electronically promptly as soon as the failure incident is resolved
- Phase 1 known as the Generation phase will require taxpayers to generate and store compliant tax invoices and notes using compliant electronic systems.
- Phase 1 is enforceable as of December 4th, 2021 for all Persons subject to the E-Invoicing Regulation.
The enforcement date for the first target group will not be earlier than January 1, 2023. And ZATCA will notify taxpayers of their Phase 2 wave at least six months in advance
- Phase 2, which will be implemented in waves by target taxpayer groups starting from Jan 1st, 2023, entails additional technical requirements that e-invoicing electronic systems must comply with, the integration of taxpayer electronic systems with ZATCA and the issuance of electronic invoices in a specific format
- Due to the technical nature of the published requirements, it is recommended for taxpayers to approach a solution provider or your internal technical teams to ensure your electronic systems are compliant with ZATCA requirements. In addition, developers and subject matter experts may visit ZATCA's website for viewing all requirements (business, technical, security, etc.).Further details on the integration mechanisms and specifications will be published by ZATCA on the developer page on ZATCA's website.
- All prohibited functionalities that are part of Phase 1
- Export of stamping key
- Time change
- For additional details on the prohibited functionalities, please refer to Annex (1) “Technical Requirements of E-invoice Generation Solutions” in the resolution
A taxpayer can use the same e-invoicing solution that was used for Phase 1, by updating the e-invoicing solution to comply with the Phase 2 requirements.
Yes, a taxpayer should continue following Phase 1 requirements until the integration enforcement date of the taxpayer’s wave, in which the taxpayer is required to start following Phase 2 requirements.
The taxpayer is not required to implement Phase 2 requirements until notified by ZATCA about the integration enforcement date of the taxpayer’s wave, in which the taxpayer is required to start following Phase 2 requirements.
Taxpayer accesses FATOORA portal using Taxpayer Portal credentials (ERAD), Then follow the EGS onboarding process and for more details please refer to Fatoora portal user manual.
After successful onboaring of each EGS, the taxpayer will be notified indicating whether the e-invoicing solution has been successfully integrated. Also, taxpayers can use the FATOORA Portal in order to view a summary list of all their integrated e-invoicing solutions.
Taxpayers and system developers can find information on integration requirements on ZATCA's e-invoicing webpage (Click here )
For simplified tax invoices (usually issued by a business to a customer), a taxpayer can choose whether to report e-invoices to ZATCA before or after sharing with the buyer, as long as e-invoices are reported to ZATCA within 24 hours after invoice issuance.
For tax invoices (usually issued by a business to another business), a taxpayer should share e-invoices with ZATCA and have them cleared before sharing with the buyer.
For additional details, please refer to the resolution ( Click here )
- Phase 2 known as the Integration phase, during this phase, subjective taxpayers must comply with Phase 2 business and technical requirements for the electronic invoices and electronic solutions, and the integration with ZATCA's system.
- Phase 2 is 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.
No, ZATCA may enforce such requirement in the future.
- Please refer to the “Invoicing and records guideline” section 4.1.2 here
- Please also note that e-invoices are not required for the following transactions:
- Exempt supplies
- Import of goods
- Supplies subject to reverse charge mechanism
Yes, however, Non-resident taxable persons for VAT purposes are excluded.
No, Persons subject to the E-Invoicing Regulation may use any invoicing systems, provided that it complies with the requirements of the Authority.
The period for storing/keeping invoices does not differ from the period specified according to the statutory requirements in the Implementing Regulations of the Value-Added Tax Law.
Yes, in accordance with article 66 in the Implementing Regulations of the Value-Added Tax Law. In case a cloud e-invoicing solution or a cloud data center located outside the kingdom is used, an extension or access to data must be available in the branch that is located in the kingdom, and it should allow access to all related records. Additionally, non-tax related regulations may apply to the taxpayer entity, such as National Cybersecurity Authority and/or National Data Management Office published laws and any other applicable regulations or controls.
Receiving an advance payment should result in the issuance of an electronic invoice and not only a receipt voucher, as per Para (1) of Article 53 of VAT Implementing Regulations.
Persons subject to the E-Invoicing Regulation must provide a copy of the tax invoice or its related credit/debit note that is electronically generated with the clients.
A printed copy of the simplified tax invoice or its related credit/debit note must be provided to the clients/buyers, however, and based on mutual agreement between the seller and client/buyer, the invoice can be shared electronically or through any other way where the client/buyer can read it.
No, based on the VAT regulation, after issuing an invoice, it is prohibited to modify or cancel the invoice. and according the regulation, a debit/credit notes must be generated to modify or cancel the generated invoice. Therefore the supplier should issue an electron credit/debit note linked to the original modified invoice.
The generated tax invoice type depends on the transaction type. For transactions between a company and an individual, a simplified tax invoice must be generated. On the other hand, if the transaction is between two companies, a tax invoice usually will be generated based on the value of the supply. And the same invoicing system can be used to issue both types of the tax invoice provided that it covered the requirements for each tax invoice.
- For exports, an electronic invoice must be generated in accordance to the E-invoicing Regulation.
- For imports, it is not subject to the E-invoicing Regulation.
No, there is no impact or changes on the declaration process
No, The list of the qualified invoicing solution providers has been built and published to facilitate the taxpayers access to the potential providers, and this list is not considered as an approval by ZATCA of the solutions nor certification.
Please refer to ZATCA’s website, the "E-invoicing" Page, and then the "Solution Providers" Page. You will be able to find a link for the qualification application, please follow the instructions and complete the application.
In order to be listed as a qualified solution provider, you must complete the qualification program, which includes completing the application, demonstrating your solution to ZATCA and finally, signing a Memo of Cooperation. After that your company details will be included in the list.
Yes, according to Paragraph (5/b) of Article 53 of the VAT implementing regulation, an invoice reference number must be visible on the invoice to identify the tax invoice. The regulation does not specify the format of this number. Taxpayers can use different formats for the invoice reference number so long as it uniquely identifies the tax invoice.
The invoice sequence mentioned within the prohibited functions under Paragraph (2/E) of Article 3 in the Controls, Requirements, Technical Specifications and Procedural Rules for Implementing the Provisions of the E-Invoicing Regulation does not refer to the invoice reference number that identifies the tax invoice.
The invoice sequence mentioned under the prohibited functions refers to the technical ability of the e-invoicing solution to issue invoices using multiple sequence counters.
To get ZATCA’s approval on Special billing arrangements please follow the link (Here) and complete the application.
ZATCA will review and notify the Taxpayer of the results
- Online cash registers, virtual cash registers on tablets, e-invoicing software installed on a computer, e-invoicing software installed on phone or tablet and cloud-based solutions are examples of e-invoicing solutions.
- Such electronic systems must comply with the specifications published by ZATCA.
- Please approach your solution provider or your internal technical teams to ensure your electronic systems are compliant with ZATCA requirements. In addition, developers and subject matter experts may visit ZATCA’s website for viewing all requirements (business, technical, security, etc.).
