Paperless solutions
for your business
ZATCA
e-Invoicing
2nd Phase
Guidebook for companies
Prepare your business for the
ZATCA second e-Invoicing Phase [Link]/ae
Table of contents
We’re officially certified by ZATCA
What is e-invoicing? 3
Why is e-invoicing being introduced in KSA? 4
Benefits for taxpayers 5
The two phases of e-invoicing regulations in KSA 6
Timeline 9
Types of e-invoices 10
e-Invoice structure 12
Illustrative diagram for Integration Phase 13
Technology 15
Infinite e-Invoice solution 18
Companies who trusted us 20
About Infinite 21
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Let’s get back to e-invoicing.
What is it and how it works?
The e-invoicing process called FATOORAH applies to taxable persons who are residents in the Kingdom
of Saudi Arabia, as well to the customers or any third parties who issue a tax invoice on behalf of
a taxable person who is a resident in the Kingdom according to the VAT Implementing Regulation.
According to the dictionary
E-invoicing is a process where businesses can send,
receive, and store invoices electronically. The main benefits
of e-invoicing are that it is paperless, efficient, and secure. Paperless Efficient Secure
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Why is e-invoicing being introduced in KSA?
The Saudi government has introduced several initiatives to digitize the economy and promote
e-invoicing, such as ZATCA. E-invoicing will help reduce the administrative burden on businesses,
improve compliance, and promote transparency.
It will also help the government keep track of companies and their activities. E-invoicing will also
create a common database for audits. With this readily available information, tax authorities won’t
need to conduct audits as frequently as before.
Expert says:
In the KSA, ZATCA, or the Zakat, Tax and Customs Authority announced the regulations that made
it mandatory for businesses to shift to e-invoicing. For those who pay VAT in KSA, the format of
e-invoices will be similar to the VAT invoices issues but will be created online. All invoices and
notes have to be issued through e-invoicing compliant systems and have to adhere to the ZATCA’s
regulations. This helps in the standardization of transactions and ensures that there is uniformity in
everything. It also ensures the secure storage of information.
– Ammar Hamednalla, e-Invoicing Manager at Infinite IT Solutions
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Benefits for taxpayers
A better experience for sellers and buyers. When you issue invoices
quickly in real time, input tax credits will be processed faster.
Electronic data will be more secure and less error-prone than paper
entries. With a proper system for validating invoices, there will be fewer
chances for fraud, leading to fair competition and improvement of trade.
A streamlined electronic invoicing process reduces slip-ups and additional
hassles for business owners. Your workload gets reduced, you get paid
faster, and you can retrieve documents easily when storing them digitally.
It helps businesses comply It reduces the administrative It is secure and reduces
with government regulations; burden on businesses. the risk of fraud;
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The two phases of
e-invoicing regulations in KSA
ZATCA has embraced two electronic invoicing regulations mandating businesses to
adopt new e-invoicing procedures in two phases. Now on schedule is second phase.
The second phase will start on January 1, 2023.
Phase 2
The following are the requirements for businesses during this phase:
• Integrate your e-invoicing solution with ZATCA’s system to allow you
to send invoices to ZATCA for validation / Clearance or Reporting.
(January 1, 2023)
• Issue invoices in specific formats such as XML or PDF/A-3 with embedded XML.
• Your system should have the capability to connect to external systems with Application Programming Interfaces (APIs)
and produce a UUID (Universally Unique Identifier), digital signature, a unique sequential number for each invoice, and
a HASH KEY.
• During this phase, you are required to archive all your invoices for a certain period of time based on your industry.
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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:
4 Dec 2021
PHASE 1 All VAT taxpayers (excluding non-resident)
requirements enforcement
1 Jan 2023
PHASE 2 TP group TP group TP group Etc.
WAVE 1 WAVE 2 WAVE 3
requirements enforcement
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PHASE 1 (as of December 4th, 2021) PHASE 2 (enforceable starting January 1st, 2023 in waves)
• Phase 1, known as the Generation phase, • Phase 2, known as the Integration phase and rol-
will require taxpayers to generate and store tax led-out in waves by targeted taxpayer group, will
invoices and notes through electronic solutions involve the introduction of Phase 2 technical and
compliant with Phase 1 requirements. business requirements for electronic invoices and
electronic solutions, and the integration of these
• Phase 1 is enforceable as of December 4th, electronic solutions with ZATCA’s systems.
2021, for all taxpayers (excluding non-resident
taxpayers), and any other parties issuing tax • ZATCA will notify taxpayers of their Phase 2 wave at
invoices on behalf of suppliers subject to VAT. least six months in advance, and is rolled-out in waves
by taxpayer group, as shown below in the table:
Taxpayers with annual
Integration taxable revenue above
Wave 1 3Bn in 2021
Taxpayers with annual
Integration taxable revenue above
Wave 2 0.5Bn in 2021
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Expert says:
It is recommended for taxpayers to start following phase 2 requirements on a voluntary
basis before their integration enforcement date and approach a solution provider or their
technical team due to the technical nature of ZATCA requirements to ensure their E-Invoice
Solutions are compliant with ZATCA’s regulations.
– Ammar Hamednalla, e-Invoicing Manager at Infinite IT Solutions
Timeline
December 4th December 4th January 1st
2020 2021 2023
Publication of the e-Invoicing generation Integration
e-invoicing regulations enforcement enforcement
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Types of e-invoices
1. Tax e-invoice (standard e-invoice)
Tax e-invoices are issued for B2B and B2G transactions,
and are generally used for claiming input VAT deduction
by buyers. In phase 1, these invoices will have to be
shared with buyers in the required format. In phase 2,
these invoices can be shared with buyers only after
being cryptographically stamped and cleared by ZATCA.
Taxpayer must generate a Tax Invoice that includes
all ZATCA mandatory fields in an electronic format
using a compliant E-Invoice Generation Solution
(EGS) which is Onboarded to ZATCA portal.
Here is a sample e-invoice
Source: [Link]
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2. Simplified e-invoices
Simplified e-invoices are issued for B2C transactions at the
point of sale. Every simplified tax invoice (B2C invoice) has
to have a QR code for validation purposes.
Since the 1st phase, all the companies have been required
to share a simplified invoice with their customers. However,
starting from the 2nd phase, all simplified transactions have
to be reported to ZATCA within 24 hours since issuing.
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e-Invoice structure
• Invoice type description
• Invoice reference number (IRN)
• Invoice issue date
• Seller’s name, address, and ID
• Buyer’s name, address, and ID
• Product or service description
• VAT calculation fields (net, gross, VAT rate, subtotals, etc.)
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How it works – operation process of phase 2
Illustrative diagram for Integration Phase
E-Invoice Generation for B2B/G transactions
Seller Buyer
1 Generates invoice
ZATCA e-Invoicing System
2 Invoice clearance
4 Invoices
Storage
3 Share Invoice
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How it works – operation process of phase 2
Illustrative diagram for Integration Phase
Simplified e-Invoice Generation for B2C transactions
Seller Buyer
Generates
1 invoice
3 Stores and shares Ability to
2 scan QR code
with ZATCA
e-Invoicing Portal
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Technology: Special fields details
• Universally Unique Identifier (UUID): Example 061c95fb-d6bb402-e-aa6-24cb09ec1d013
• Cryptographic Stamp:
Tax Invoice Generated by ZATCA, Simplified Invoice Generated by the Tax Player Solution.
• Cryptographic Stamp Identifier: Credential that is associated
with a cryptographic stamp and associates it with a registered Invoice Solution.
• Previous Invoice Hash: Automatically generated within the taxpayer’s invoice solutions and
is not visible on the invoice. The hash can be thought of as a digital fingerprint of the invoice.
• QR Code: The QR contains basic invoice data
and is included within the printed invoice and the electronic invoice.
• Invoice counter: A functionality of electronic invoice solutions
and is generated automatically by the solutions.
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QR code
• Seller’s name
• VAT registration number of the seller
• Time stamp of the e-invoice or credit/debit note (date and time)
• e-Invoice or credit/debit note amount (with VAT)
• VAT amount
• Hash of XML e-invoice or credit/debit note
• Cryptographic stamp
• Public key used to generate the cryptographic stamp
• ZATCA portal cryptographic stamp of the public key of the e-invoicing solution
Technology: Special fields details
Integration Invoice Generation Security & Integrity
• Internet Connectivity • Invoice fields • QR code
• Invoice clearance • Invoice format • Cryptographic stamp
• Invoice reporting • Invoice storage • Device Registration
• UUID
• Hash
Click here to see the full list of mandatory fields
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Here’s what you have
to do for each transaction:
• Use a compliant e-invoicing system to generate the e-invoice with all the required fields.
• Issue a copy to the buyer. By phase 2, you will need to push this invoice
to ZATCA’s portal and get it validated before you send it to the buyer.
• Store the e-invoice in your system for future reference.
Moving to a cloud-based solution that offers you e-invoicing
features will make storage easier and ensure compliance automatically.
Expert says:
Remember that you have to follow each of ZATCA standard in UBL and readable format
otherwise you will experience rejected invoices.
Rejected invoices cannot be edited and should be archived with other invoices. To correct
this, you must issue a new invoice with a new invoice number and the UBL must contain the
same hashkey of the invoice you want to correct. We at Infinite have solved this problem by
having a double validation engine on our ZATCA E-invoicing solution. This ensures that all
invoices sent by our middleware will not be rejected by ZATCA.
Invoices that have been rejected by our middleware can be easily edited and resent to our
middleware.
– Ammar Hamednalla, e-Invoicing Manager at Infinite IT Solutions
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Infinite e-Invoice solution
Ready-to-deploy connectors for a wide
range of ERPs – SAP, Oracle, Microsoft Legally compliant electronic
Dynamics, other – to integrate with signatures of e-invoices
ZATCA’s or other national platforms
A single connector automating
Time stamping of documents
document flow with both public
stored in e-Archive
and private sectors
Real-time validation of content 100% compliance with the
verifying the legal compliance of ZATCA’s or other national
sent and received documents e-Invoicing platforms
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Choose proven specialist
certified by ZATCA
Fullfill all regulations with us
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Companies from Saudi Arabia who trusted us:
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About Infinite
Infinite IT Solutions has pioneered paperless solutions which
automate and enhance key business processes for over 20 years,
consistently delivering business value with the latest technology.
Our aim is to promote one paperless ecosystem providing a B2B
marketplace with various solutions being used by more than
10 000 companies in Europe and Middle East and Africa.
Check our other solutions:
Data
e-Invoice e-Catalogue e-Archive
Automation
eCustomer
SFA eSign Marketplace
Service
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For more details
Please contact with us
Ammar Hamednalla
GCC Sales Manager
ammar@[Link]
+971 4 584 6951
Sign up for a free consultation Find us on social media:
click here to fill the form
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