Simplified Guide

June 16, 2021 9:29 amSimplified GuideE-invoicing (FATOORAH)Phase One Requirements(Taxpayer version)Applicable to all persons subject to VAT and any other partiesissuing tax invoices on behalf of suppliers subject to VAT.Non-resident taxable persons for VAT purposes are excluded.

ContentIntroduction6 key definitions to know prior tonavigate the guideE-invoicing (FATOORAH) implementationgeneral overviewHow to comply with Phase One(December 4, 2021) requirements?E-invoice SamplesHow can taxpayers preparefor E-invoicing (FATOORAH)?How does E-invoicing work?Things not to doExamples of prohibitedfunctionalities for E-invoicing SolutionsContact us2CLICK ON THE SECTIONTO MOVE DIRECTLY

IntroductionZakat, Tax and Customs Authority announced in December 2020 thatE-invoicing implementation will be mandatory effectively from Decem-ber 4, 2021 for all taxpayers subject to VAT except for non-residents inthe Kingdom of Saudi Arabia whom are subject to VAT in addition toany other parties that issue tax invoices on behalf of suppliers subjectto tax.In December 4, 2020, the authority published the E-invoicing regula-tions specifying the terms, requirements and conditions related toelectronic invoices and its associated notes. In May 28، 2021, the authority has issued further details related to the controls, requirements,technical specifications and procedural rules for implementing the provisions of the E-invoicing Regulation.This simplified guide aims to provide the taxpayers a non-technical overview of the E-invoicing implementation in the Kingdom ofSaudi Arabia and its requirements to facilitate their readiness forPhase One (enforceable as of December 4, 2021).Illustrative example an E-invoicing system3

6 key definitions to know prior tonavigate the guideE-invoicingElectronic Invoicing is a procedure that aims to convert the issuing ofpaper invoices and notes into an electronic process that allows theexchange and processing of invoices, credit notes and debit notes in astructured electronic format between buyer and seller through anintegrated electronic solution.E-invoiceA tax invoice that is generated in a structured electronic formatthrough electronic means. A paper invoice that is converted intoan electronic format through copying, scanning, or any othermethod is not considered an electronic invoice.Tax InvoiceAn invoice that is usually issued by a Business to anotherBusiness (B2B), containing all tax invoice elements.Simplified Tax InvoiceAn invoice that is is usually issued by a Business to a Con-sumer (B2C) containing all simplified tax invoice elements.E-invoicing systemsOnline cash registers, virtual cash registers on tablets,e-invoicing software installed on a computer, e-invoicingsoftware installed on phone or tablet and cloud-basedsolutions are examples of E-invoicing systemsQR CodeA type of matrix barcode, with a pattern of black and whitesquares that is machine readable by a QR code scanner or thecamera of smart devices in order to enable basic validation ofElectronic Invoices and Electronic Notes4

E-invoicingimplementation phasesDecember4, 2020May 28,2021”Phase One“(Generation Phase)December4، 2021”Phase Two“(Integration Phase)January1، 20235Publication of theE-invoicingRegulationsPublication of the Resolution on the controls,requirements, technicalspecifications and procedural rules necessaryto implement E-invoicing Regulations for PhaseOne and Phase Two.Taxpayers are required togenerate and store compliant electronic tax invoicesand notes using compliante-invoicing systems.Integration of taxpayer e-invoicing systems with ZATCAin waves by targeted taxpayer groups. Taxpayers will benotified by ZATCA on the dateof their integration at least 6months in advance.

How to comply with Phase One(December 4, 2021)?Use compliant E-invoicing systemTaxpayers must equip themselves with an E-invoicing system complying with Phase One requirements. Taxpayers may approach theirsolution provider or internal technical teams to ensure their e-invoicing systems are compliant with ZATCA requirements. In addition, developers and subject matter experts may visit ZATCA’s website to viewall the requirements (business, technical, security, etc.).Generating and storing E-invoicesTaxpayers must generate electronic invoices using compliant e-invoicing systems. Manual and hand-written invoices will no longerbe considered as compliant tax invoices.Ensure all elements of the tax invoice are fulfilledGeneration of E-invoices must include all fields in accordance withVAT regulations in addition to:(Tax Invoice)The VAT number of the buyer if the buyer is a registered VATtaxpayer. QR Code can be added (Optional).)Simplified Tax Invoice (A mandatory QR Code generated by the taxpayer’s E-invoicingsolution in accordance with ZATCA’s specifications.6

E-invoice SamplesPhase One (Generation Phase)(Tax Invoice)Illustrative Example of an invoice issuedbetween two VAT registered businesses.Electronic Tax Invoices for Phase One (December 4, 2021)have the samerequirements of current tax invoices, in addition to the buyer’s VATnumber if registered in VAT, QR code may be added optionally.IllustrativeexampleTax InvoiceInvoice Number:100100Invoice Issue Date: 25/4/2022Date of e:Al Salam SuppliesCo. LTDName:AL KAWTHARMARKETSBuilding No.8228Building No.3709Street NameKing Abdulaziz RoadStreet NameKing Abdullah RoadDistrictAl AmalDistrictAl stal Code1264312643Postal Code1156411564Additional No.21212121Additional No.10041004VAT Number:310175397400001VAT Number:310175398400002Other Seller ID:Commercialregistration ۱۲۳٤٥٦۷۸۹۰Other Buyer ID:SAGIA License A310175398400002123C12345678Line Items:Nature of goodsor servicesItem A Item B -Unit priceQuantity200.00 SAR350.00 SARTaxable Amount12Discount200.00 SAR700.00 SARTax Rate00Tax Amount15%15%30.00 SAR105.00 SARItem Subtotal(Including VAT)230.00 SAR805.00 SARTotal amounts:Total (Excluding VAT).900.00 SARDiscount0.00 SARTotal Taxable Amount (ExcludingVAT)900.00 SARTotal VATTotal Amount Due135.00 SAR1,035.00 SAR(Simplified Tax Invoice)Illustrative Example of an invoice issuedbetween business to customer (B2C).Electronic Simplified Tax Invoices for Phase One (December 4, 2021)have the same requirements of the current simplified tax invoices,however, QR Code must be included in the E-invoice.Illustrativeexample ﻓﺎﺗورة ﺿرﯾﺑﯾﺔ اﻟﻣﺑﺳطﺔ Simplified Tax InvoiceInvoice Number100Invoice Issue Date25/4/2022100 رﻗم اﻟﻔﺎﺗورة 25/4/2022 ﺗﺎرﯾﺦ اﺻدار اﻟﻔﺎﺗورة Al Salam Supplies Co. LTD ﺷرﻛﺔ اﻟﺳﻼم ﻟﻠﺗورﯾدات اﻟﻣﺣدودة 8228, King Abdulaziz Road, Al Amal,Riyadh, 12643 - 2121, KSAVAT Number:Nature of goods orservices ﺗﻔﺎﺻﯾل اﻟﺳﻠﻊ أو اﻟﺧدﻣﺎت 310175397400001Unit price ﺳﻌر اﻟوﺣدة ، اﻟرﯾﺎض ، ﺣﻲ اﻟﻌﻣل ، طرﯾق اﻟﻣﻠك ﻋﺑداﻟﻌزﯾز ،8228KSA ،2121-12643 رﻗم ﺗﺳﺟﯾل ﺿرﯾﺑﺔ اﻟﻘﯾﻣﺔ 310175397400001: اﻟﻣﺿﺎﻓﺔ Item Subtotal(Including VAT) اﻟﻣﺟﻣوع )ﺷﺎﻣل ﺿرﯾﺑﺔ ( اﻟﻘﯾﻣﺔ اﻟﻣﺿﺎﻓﺔ Quantity اﻟﻛﻣﯾﺔ Item A - اﻟﺳﻠﻌﺔ أ 200.00 SAR1230.00 SARItem B - اﻟﺳﻠﻌﺔ ب 350.00 SAR2805.00 SAR اﻹﺟﻣﺎﻟﻲ اﻟﺧﺎﺿﻊ ﻟﻠﺿرﯾﺑﺔ )ﻏﯾر ﺷﺎﻣل ﺿرﯾﺑﺔ اﻟﻘﯾﻣﺔ ( اﻟﻣﺿﺎﻓﺔ 900.00 SAR ﻣﺟﻣوع ﺿرﯾﺑﺔ اﻟﻘﯾﻣﺔ اﻟﻣﺿﺎﻓﺔ 135.00 SAR إﺟﻣﺎﻟﻲ اﻟﻣﺑﻠﻎ اﻟﻣﺳﺗﺣق 1,035.00 SARTotal TaxableAmount (ExcludingVAT)Total VATTotal Amount Due7

E-invoice SamplesAs part of Phase One (Generation Phase), thebelow fields are the minimum required fieldsthat must be shown after scanning a QRcode in a simplified tax invoice:IllustrativeexampleSeller’s nameVAT registrationnumber of thesellerTime stamp of theElectronic Invoice orCredit/Debit Note(date and time)VAT totalElectronic Invoice orCredit/Debit Notetotal (with VAT)8

How can taxpayers preparefor E-invoicing (FATOORAH)?Taxpayers may prepare for E-invoicing(FATOORAH) implementation by:Visit E-invoicing (FATOORAH)webpage gazt.gov.saAcquire or upgradeto a compliantE-invoicing systems.UnderstandE-invoicefields.Test the generation of theE-invoices prior to theenforcement date.Ensure readiness of your staffto use the E-invoicingsystems.9

How does the E-invoicing work?Enforceable as of December 4, 2021The E-Invoicing model can be summarizedas follows:The seller generates and stores the electronic invoice through acompliant e-invoicing system.the E-Invoice should include all the mandatory fields in the tax invoice.The buyer receives a copy of the invoice.Sellerbuyergenerates an E-invoice)for simplified Tax invoices(Ability to scan theQR code10Store theE-invoiceelectronically

Things not to do on December4, 202101Generate manual / hand-written invoices.02Generating invoices that do not fulfil the03Usage of a system that does not comply with the0411authority’s requirements.E-invoicing requirements as published by the authority.Deleting E-invoices after issuing them.

Examples of prohibited functionalitiesfor e-invoicing systemsPhase One (Generation Phase)Lack of user management capabilities (uncontrolled010203access) for example:Anonymous Access.Absence of user session management.Tampering of e-invoices or theirassociated notes or logs.Ability to create multiple ElectronicInvoice sequences.Phase Two (Integration Phase)01All prohibited functionalities that are partof Phase One.02Export of stamping key.03Time change.For more information about the prohibitedfunctionalities, please refer to the Annex (1)of the the controls, requirements, technicalspecifications and procedural rules forimplementing the provisions of theE-invoicing Regulation (here)12

Contact usFor more information about E-invoicing, youmay check our contact info and our officialchannels on social media.Call center (19993)Twitter (@zatca sa)Website (gazt.gov.sa)Live chate-mail(info@gazt.gov.sa)13

This simplified guide has been prepared for guiding purposes. It is subject to amendment at any time, and is notconsidered binding to the authority, nor a legal advice,and it cannot be relied upon and acted accordingly with.out reference to the relevant regulationsEvery taxpayer subject to tax regulations is obligated toensure the fulfillment of his duties and commitments asper regulations, and he alone is responsible for comply-ing with regulations properly. Zakat, Tax and CustomsAuthority will never be liable in any manner to any dam-age or loss resulting from the incorrect implementation.of tax regulations14

E-invoice Samples Electronic Simplified Tax Invoices for Phase One (December 4, 2021) have the same requirements of the current simplified tax invoices, however, QR Code must be included in the E-invoice. (Tax Invoice) Illustrative Example of an invoice issue