25 FAQs to Navigate E-Invoicing in Saudi Arabia Easily

The Zakat, Tax and Customs Authority (ZATCA) introduced mandatory e-invoicing in Saudi Arabia on 4th December 2021. Since then, there have been ample developments in Saudi Arabia’s digital transformation attempt. The mandate has come a long way, making Saudi one of the fastest in applying the system to all establishments liable to pay VAT. As per the stats shared by ZATCA, already over 300,000 establishments have been successful in utilising e-invoicing in phase one as of 2023.

Not just that, there are over 14,000 e-invoicing systems integrated with (the) Fatoora platform, as well as over 400 million invoices (that) have been shared via the platform since Jan. 1, 2023.

With new amendments in the e-invoicing policy, there is bound to be confusion. That’s why we have a set of 25 questions on e-invoicing in Saudi Arabia answered for you –

Q1. What is e-invoicing (Fatoora) in Saudi Arabia & when did e-invoicing become mandatory in Saudi Arabia?

Fatoora in Arabic means an e-invoice. E-invoicing became mandatory in Saudi Arabia in December 2021 in phases for businesses with turnover over SAR 40 million. From December 2022, it applied to all VAT-registered businesses.

Read-in Depth – E-Invoicing (Fatoora) in Saudi Arabia

Q2. Why is e-invoicing mandatory in Saudi Arabia?

There are various reasons why e-invoicing became mandatory in Saudi Arabia. In the words of the government of Saudi Arabia government, few reasons include fair competition, combating commercial concealment protecting consumer rights, enhancing tax compliance, and eliminating shadow economy.

Q3. What are the different phases of e-invoicing implementation?

As per ZATCA guidelines, there are two phases of e-invoicing in Saudi Arabia:

Phase 1 – Generation

During the first phase, the Generation Phase, the mandate asks the taxpayers to use a compliant e-invoicing solution to create and retain tax invoices, simpler tax invoices, and corresponding credit and debit notes. ZATCA implemented this phase on December 4th, 2021. It applies to all taxpayers except non-residents, as well as any entities issuing invoices on behalf of VAT-registered suppliers subject to VAT.

The process of issuing e-invoices will resemble current invoicing practices but will be conducted through a compatible electronic billing system. Each e-invoice must contain all necessary information according to the specific type of invoice being issued.

Phase 2 – Integration

Saudi Arabia’s ZATCA launched the integration phase and implemented it from 1st January 2023. Divided into various waves, it is being implemented in 9 waves till date. 

Sr. No	Name of the Wave	VAT Turnover	Turnover of which year?	Effective date
1.	Wave 1 under phase 2	Above SAR 3 billion	2021	1st January 2023
2.	Wave 2 under phase 2	Above SAR 500 million and below SAR 3 billion	2021	1st July 2023
3.	Wave 3 under phase 2	Above SAR 250 million and below SAR 500 billion	2021 or 2022	1st October 2023
4.	Wave 4 under phase 2	Above SAR 150 million and below SAR 250 million	2021 or 2022	1st November 2023
5.	Wave 5 under phase 2	Above SAR 100 million and below SAR 150 million	2021 or 2022	1st December 2023
6.	Wave 6 under phase 2	Above SAR 70 million and below SAR 100 million	2021 or 2022	1st January 2024
7.	Wave 7 under phase 2	Above SAR 50 million and below 70 million	2021 or 2022	1st February 2024
8.	Wave 8 under phase 2	Above SAR 40 million and below 50 million	2021 or 2022	1st March 2024
9.	Wave 9 under phase 2	Above SAR 30 million and below 40 million	2021 or 2022	1st June 2024

 

Q4. What types of businesses are required to comply with e-invoicing?

During this phase, taxpayers must fulfill both technical and business requirements for electronic invoicing solutions and integrate them effectively with ZATCA’s systems. This integration involves aligning their systems for issuing electronic invoices, credit, and debit notes with ZATCA’s infrastructure to facilitate seamless data sharing and information exchange.

For sellers, a crucial step entails obtaining real-time clearance for the Tax Invoice from ZATCA before sharing it with buyers as a legally recognised e-invoice. Additionally, sellers must promptly report simplified invoices to ZATCA within 24 hours of generation. This ensures compliance and transparency in the invoicing process, benefiting both sellers and buyers alike.

Q5. What are the penalties for non-compliance with e-invoicing?

Saudi Arabia is very strict with their FATOORA law-abiding requirements and has zeroed down on charging hefty fines on businesses and taxpayers who do not follow the ZATCA guidelines of e-invoicing in Saudi Arabia.

Though there is a provision of modesty being shown for first-time violators by ZATCA. But there is hardly any scope of leniency for repeat defaulters. The penalty will only increase for such cases as per the type of violation.

Q6. What are the benefits of using e-invoicing software?

An e-invoicing software is proving to be the right solution for taxpayers in Saudi Arabia. The businesses and finance teams in KSA are still not handy for the digital transformation that the government is providing. Thankfully, an e-invoicing software is proving to be a great asset at such times. Making the processes very simple, an e-invoice software helps create and share e-invoices within seconds.

Additionally, leveraging e-invoicing software like VATrobo provides users with a range of benefits, including

• 100% automated invoice generation,  
• real-time clearance from tax authorities,  
• seamless integration with existing ERP systems,  
• comprehensive reporting capabilities,  
• and enhanced compliance.

VATrobo’s advanced and cutting-edge technology is fully compliant with ZATCA, and it is a powerful tool that streamlines your e-invoicing process, boosts efficiency, and ensures compliance for businesses in Saudi Arabia.

Q7. What are the key features of a good e-invoicing software for Saudi Arabia?

Your E-invoicing software shall boost of many features. Some of them we have mentioned in the question above. But the biggest feature an e-invoicing software shall consist of is the capability to scale and customize your key business requirements in one dashboard.

VATrobo – The fastest growing e-invoicing software in Saudi Arabia is built for large scale enterprises. No matter the scale of your business, we cater to your needs with customised solutions. Helping you adapt to all the legal laws and regulations of KSA e-invoicing, we let you adjust to this digital transformation with ease.

Here are the key feature highlights of VATrobo:

• Make 1000’s of e-invoices in seconds with 100% automated solutions in both languages English and Arabic. 
• Get 200+ auto-validation checks for an error-free e-invoicing experience. 
• Modify and resubmit failed XML files without redirecting to the original POS system.   
• Get started within weeks with a non-disruptive end-to-end ERP integration system. 
• Excellent 12*6 customer support system for expert consultation on ZATCA-compliance.

Q8. What are the technical requirements for e-invoicing software in Saudi Arabia?

This phase will also have more technical requirements, so it’s best to have a system that provides built-in compliance with ZATCA’s guidelines. Your system must be able to connect to external systems with APIs (Application Programming Interfaces), and generate a Universally Unique Identifier (UUID), a digital signature, a sequential number which differentiates each e-invoice, a hash, and a cryptographic stamp. Your system should also be equipped with anti-tampering features.

Q9. How does e-invoicing software integrate with the ZATCA platform?

Our software is registered with ZATCA’s system. We use ZATCA’s APIs which are integrated in our system. Using these APIs our platform communicates with the ZATCA system on a real time basis and helps you generate and verify e-invoices within seconds easily. Our platform API integrates with client’s ERP and gives them e-invoicing services.

Q10. What is the process for issuing and receiving e-invoices using software?

The process of issuing and receiving e-invoices using VATrobo is quite straight forward. The automation process of VATrobo lets you upload bulk information, add the invoice data via the interface and automate the data integration process required in an invoice all at the same time. Once the records are uploaded, the system generates UUID, invoice counter value, invoice hash, QR code & converts invoice into specified XML format as per e-invoicing in Saudi Arabia regulations.

We send the invoice in XML format to the ZATCA Fatoora portal in real time and the FATOORA portal verifies the invoice to our platform in real time.

Q11. How does e-invoicing software handle credit notes and debit notes?

The treatment of debit notes and credit notes is the same as that of other invoice data.

Q12. What happens if there is an error in an e-invoice?

If there is any discrepancies in an e-invoice generated and shared, one can easily rectify the same and resend the e-invoice with minimal efforts by auto-filling all relevant data via VATrobo’s automated processes.

Q13. How does e-invoicing software ensure data security?

VATrobo works on high quality industry–grade security system, ensuring your data remains protected always. Alongside, the top-notch security of our cloud technology lets you store 6 years of historic data stored in safely.

Q14. What are the reporting requirements for e-invoicing data?

The ZATCA requires the taxpayer to report certain details with the authorities. These include reporting the tax invoice with ZATCA system so that the invoice gets approved and then share it with the buyers as a legally valid e-invoice. However, the seller is required to report simplified invoices to ZATCA within 24 hours from the time of generation.

Q15. What are the different types of e-invoicing software available in Saudi Arabia?

There are two types of e-invoicing software. One is standalone software just like VATrobo, and the other option is generating e-invoices within your ERP systems.

Q16. What are the costs associated with using e-invoicing software?

The costs charged by various e-invoices vary.

Q17. Do I need to train my employees to use e-invoicing software?

Yes, it is quite important to train the finance and tax teams using an e-invoicing software for better operations. It not only leaves less room for errors but also improves efficiency. VATrobo’s experts guide and train an organization’s team extensively using the software to work better with the software. Moreover, our 12*6 support team is readily available to not only guide you through the process but also help the teams wherever they are stuck.

Q18. Where can I get more information about e-invoicing in Saudi Arabia?

If you are interested in reading about the latest happenings in Saudi Arabia’s e-invoicing, go to zatca.gov.sa/en/E-Invoicing. Alternatively you can read the latest regulations and interesting blogs around the Saudi Arabia’s e-invoicing on www.binarysemantics.com.

Q19. What are the upcoming changes to e-invoicing regulations in Saudi Arabia?

The latest update we witnessed was the 9th phase of ZATCA e-invoicing. In the wave, the taxpayers with revenues subject to VAT exceeding SAR 30 Million during 2021 or 2022 mandatorily require to generate e-invoices. They also have to integrate their e-invoicing solutions with the FATOORA Platform starting June 1, 2024.

Q20. How can I ensure my e-invoicing software is compliant with the latest regulations?

E-invoicing in Saudi Arabia is under constant new regulation updates, and so instilling these changes becomes important. Using an e-invoicing software that incorporates the relevant changes automatically and doesn’t comply with the regulatory requirements is imperative. If not, then your e-invoices will be rejected at the FATOORA portal. VATrobo is one such software that automatically incorporates all regulation changes and never lets your processes suffer.

Q21. How can I use e-invoicing software to automate my invoicing process?

The biggest automation an e-invoicing software provides is auto uploading data in an invoice from Excel, adding the invoice data via interface and automating data integration process. VATrobo does all three. Bulk upload the data and let the software do the rest of the job for your finance team.

Q22. How can I integrate e-invoicing software with my other accounting software?

This can be done easily via APIs.

Q23. How can I use e-invoicing software to improve my cash flow?

E-invoicing software offers a streamlined solution to enhance cash flow management. By automating billing processes, it accelerates invoice generation and delivery, leading to faster payments from clients. Additionally, it provides advanced tracking and management features, allowing businesses to monitor invoice status and follow up on overdue accounts promptly. Integration with accounting systems ensures real-time synchronization of financial data, facilitating accurate insights into cash flow.

Furthermore, e-invoicing software minimizes billing errors and disputes, reducing payment delays and ensuring a steady cash flow. Some platforms also offer financing options, such as invoice financing, to help businesses access funds tied up in outstanding invoices, ensuring uninterrupted operations. Overall, leveraging e-invoicing software optimizes invoicing processes, accelerates payments, and improves cash flow management for businesses.

Q24. How can I use e-invoicing software to gain insights into my business data?

A good e-invoicing software will offer you smart reports to monitor, compare, and analyse your sales data in easy Excel formats. These reports are insightful and also let you be on track with your buyers and sellers, leaving no space for errors and discrepancies.

Q25. What are the future trends in e-invoicing?

E-invoicing today is just the start. There are various key trends shaping the evolution of e-invoicing, such as the shift away from PDF formats to structured data, the role of data analytics, and the importance of embracing digitization for the real-time economy.

Additionally, it is safe to say that key challenges will remain the same – government mandates and top-down demands from large corporates. It is important to underscore the emergence of platform-agnostic solutions and the rise of e-invoicing-as-a-service models, offering businesses flexibility and scalability. Overall, businesses will gain from investing in e-invoicing solutions that can adapt to future trends and provide the agility needed to thrive in the future.