The General Authority of Zakat and Tax authority in Saudi Arabia Zakat Authority announced the “E- Invoice” system with the aim of reducing commercial cover-up and keeping up with global tax procedures. Let’s find out more about it.
GAZT E-Invoice KSA: Key Info and FAQs
What is an E-Invoice?
The E-Invoice, or electronic invoice, according to the regulation, is defined as a tax invoice that is issued electronically via an electronic medium and is issued by every taxpayer subject to value added tax in the Kingdom of Saudi Arabia.
The electronic invoice regulation contains seven articles that organize the mechanism for issuing and keeping electronic invoices with the taxpayers, as well as clarifying the provisions, procedures and persons subject to them, in addition to the procedural rules and time limits.
GAZT confirmed that the regulation has entered into force from the date of publication, noting that the mandatory application will be made to taxpayers subject to it. They will be issued invoices which they will keep from the fourth of December.
GAZT E-Invoice KSA: FAQs
What is an electronic invoice?
An electronic invoice is an invoice that is issued, saved and amended in an electronic format organized through an electronic system and contains all the requirements of a tax invoice.
A handwritten or scanned invoice is not an electronic invoice.
What is the electronic invoicing system?
The electronic invoicing system is a procedure that aims to transform the process of issuing invoices and paper notices, for example, written or scanned, into an electronic process that allows the exchange of invoices and debit and credit notices and their processing in an electronic format organized between the seller and the buyer in an integrated electronic format.
What are the documents that are not classified as electronic invoices?
Unstructured invoice data issued in a format eg PDF or Word Scanned paper invoice in any format including but not limited to JPG or PDF Unstructured invoice on a web page or in an email.
What is the mechanism for applying the electronic invoicing system?
The mechanism of applying the electronic invoicing system has two main stages:
The first stage: Issuing and keeping electronic invoices and debit and credit notices in an electronic format organized through an electronic system and containing all the requirements of the tax invoice.
The second stage: linking the systems of issuing electronic bills and debit and credit notices to those charged with the systems of the General Authority for Zakat and Income in order to share data and information.
Who is subject to the electronic invoice regulation?
All taxpayers are subject to value added tax except for taxpayers not residing in the Kingdom in addition to any party that issues a tax invoice on behalf of the taxpayer subject to value added tax.
Why does the Kingdom of Saudi Arabia implement electronic invoices?
- Reducing hidden economy transactions
- Increasing the percentage of compliance in submitting tax returns
- Reducing commercial concealment
- Harmonization with leading global practices and improving the Kingdom’s classification in relevant international indicators
- Promoting fair competition and consumer protection
Is the electronic issuance and preservation of invoices and debit and credit notices mandatory for the first stage?
Yes, the mandatory application for issuing and keeping electronic invoices and debit and credit notices will be on December 4, 2021, and includes all taxpayers subject to value added tax, except for those who are not residing in the Kingdom of Saudi Arabia, in addition to any party that issues a tax invoice on behalf of the taxpayer subject to value added tax.
What are electronic notifications?
These are the debit and credit notes resulting from modifications to the electronic invoice that must be issued electronically.
Paper modifications that are photocopied or scanned are not considered electronic modifications.
Is linking the electronic invoicing and debit and credit notification systems mandatory for the second stage?
The General Authority of Zakat and Income will issue requirements, controls, details and procedures for linking electronic invoicing systems and application stages within a period not exceeding 180 days from the date of publishing the regulation.
Will GAZT issue any technical requirements or specifications other than those mentioned in the electronic invoicing regulation?
Yes, in addition to the electronic invoicing regulation, the authority will issue two separate resolutions to provide more requirements and technical specifications:
- Specifications for issuing and keeping electronic invoices and debit and credit notices, first stage.
- Specifications for linking electronic invoicing and debit and credit notices systems, second stage.
The General Authority of Zakat and Income will issue these two decisions within a period not exceeding 180 days from the date of publication of the regulation.
Is there a grace period to comply with the electronic invoicing regulation?
Yeah. Persons subject to the electronic invoicing regulation are granted a grace period starting from the date of publishing the regulation in the Official Gazette until December 4, 2021.
Are there penalties and fines for non-compliance with the regulation?
Penalties related to tax invoices and debit and credit notices shall be applied according to what is stated in the value-added tax system and its executive regulations, after the mandatory application of issuing and keeping electronic invoices and debit and credit notices on December 4, 2021.
What are the components of an electronic invoice?
Terms, requirements and conditions related to electronic invoices for value-added tax purposes under Article 53 of the VAT Implementing Regulations, in addition to any other fields that will be determined later by the Authority to ensure the success of the transition to electronic invoicing.
How are electronic bills saved? Are there conditions for preservation?
Since the electronic invoice is a tax invoice in accordance with the provisions of the value-added tax system, all provisions that apply to tax invoices, including the rules for keeping tax invoices stipulated in the value-added tax legislation, and in particular what is stated in Article 66 of the executive regulations of the value-added tax system, apply to it.
What are the available languages for dealing and issuing electronic invoices?
The electronic invoice must be issued in Arabic, but it is possible to issue it in additional languages besides Arabic.
What is meant by the electronic means mentioned in the definition of electronic invoice in the electronic invoicing regulation?
Any device, electronic system, or application used to issue electronic bills and debit and credit notices, provided that it complies with the following minimum requirements:
- The ability to connect to the Internet
- Comply with the requirements and controls of data, information or cyber security in the Kingdom
- It is not subject to tampering and includes a mechanism to detect cases of tampering
- It can be linked with external systems using the application programming interface API
Should the provisions contained in this regulation be adhered to on debit and credit notices?
People subject to this regulation must issue electronic invoices for all their transactions for which tax invoices must be issued, in addition to electronic debit and credit notices that must be issued in the cases stipulated in the value-added tax system and its implementing regulations.
Is the taxpayer required to issue an electronic invoice for sales outside the Kingdom of Saudi Arabia for export?
Yes, the taxpayer who is subject to value added tax residing in the Kingdom of Saudi Arabia must issue electronic invoices starting from the date specified in the regulation for all his/her taxable supplies, whether at the basic rate or the zero rate for a customer resident or non-resident in the Kingdom.
Is the taxpayer subject to the electronic invoicing regulation required to submit the returns periodically to the authority?
Yeah. The taxable person must continue to file tax returns on their regular dates in accordance with the provisions of the value-added tax system and its implementing regulations.
Is the E-Invoice list a separate list?
No, the electronic invoice regulation is an integral part of the implementing regulations for the value-added tax system issued by No. 3839 dated 12/14/1438.
What are the actions to be taken now to start the E-invoicing journey?
The best foot forward is to take the help of E-Invoicing service providers such as pulseinfotec.co. As GAZT releases further guidance, there may be further actions required in the aspects of master data, reporting, and the actual design, implementation and integration activities required. Pulseinfotec.co can help you with all of that. If you are doing it yourself, you must first determine whether you are subject to the electronic invoicing regulation or not, and then assess your readiness to issue and save electronic invoices and debit and credit notices in accordance with the minimum standards and requirements stipulated in the regulation, in addition to following up on the authority’s official channels to keep pace with any additional technical details.