A draft resolution detailing the technical and functional implementation guidelines of E-invoicing has been released on 18th March 2021 by Saudi Arabia’s General Authority of Zakat and Tax (GAZT) as an addendum of earlier released regulations published during December last year.
The E-invoicing implementation has been planned in two phases, the first one going live on 4th December 2021 followed by the second phase that would go live on 1st June 2022 GAZT has also announced that all businesses may not be needed to comply with the requirements by 1st June 2022 and the details will be published as a separate resolution afterward.
Unlike a handwritten or scanned invoice, an electronic invoice is generated, stored, and amended in a structured electronic format through an electronic solution that includes all the requirements of a tax invoice. Credit and Debit Notes issued in an Electronic format, as a result of amendments conducted in the Electronic Invoice are called electronic notes and don’t include photocopied or scanned paper notes.
E-invoicing will be used for VAT purposes and will apply to all taxable persons excepting the non-resident taxable persons and any other party issuing tax invoices on behalf of a supplier subject to VAT. Exempt supplies and imports of goods and services subject to Reverse Charge Mechanism (RCM) are excluded from E-invoicing requirements
The contents of an electronic invoice will have all Terms, requirements, and conditions applicable to tax invoices as per Article (53) of the VAT Implementing Regulation. All applicable provisions of tax invoices will apply to Electronic Invoices, including the rules of storage of tax invoices stipulated in the VAT legislation, and specifically, Article (66) of the VAT Implementing Regulation.
For simplified e-invoices and notes, a Quick Response (QR) code of a Base64 format with up to 500 characters must be generated and printed on simplified e-invoices and E-notes. Additionally, controls/mechanisms should be implemented to avoid tampering of the e-invoices.
The e-invoice and E-notes must be issued in XML or PDF format and shall generate a universally unique identifier. For simplified e-invoices and E-notes, businesses will need a cryptographic stamp to be included on the electronic invoices or notes.
The details regarding implementation timelines, targeted groups, and specifications for generation, storage and integration including approved external provider details for E-invoice Generation Solutions will be issued by the GAZT at a later date.
The implementation of Electronic Invoicing will have two phases and will include two specifications:
- Phase one is for the generation and keeping of tax invoices and electronic notes in a structured electronic format issued through an electronic solution that combines all the requirements of tax invoices.
- Phase two is the Integration of the electronic solution of taxable persons used for generating electronic invoices and notes with the system of GAZT for data sharing.
The Kingdom of Saudi Arabia has planned to introduce e-invoicing as a step towards global best practices aiming for increased compliance with tax obligations, better consumer protection, and fair business competition.
As E- invoicing is made mandatory, businesses that need to issue E-invoices and/or E-notes as per E-invoicing Regulations must make themselves aware of necessary requirements.
All businesses must carry out an initial gap analysis for evaluating if their existing system and technical specifications of E-invoicing complies with the draft resolution requirements.
GAZT also welcomed public comments that can be shared till 17 April 2021 allowing taxpayers and E-invoicing service providers including advisors and other interested parties to comment on the draft resolution.