In Saudi Arabia, the Zakat, Tax, and Customs Authority (ZATCA) has implemented a comprehensive e-invoicing system to ensure compliance and transparency. There are two main types of e-invoices under the ZATCA system:
1. Tax Invoices:
- Purpose: These are issued by businesses when selling goods or services to other businesses (B2B transactions) or to government entities (B2G transactions).
- Format: Tax invoices must be generated in XML format and include all mandatory fields, such as the Taxpayer Identification Number (TIN) of both the buyer and seller, invoice date, item descriptions, quantity, and total amounts.
- Digital Signature: Tax invoices must be digitally signed using a certified electronic signature, and they are required to include a Unique Invoice Identifier (UUID).
- QR Code: A QR code must be added to the invoice to enable quick and easy validation by ZATCA.
2. Simplified Tax Invoices:
- Purpose: These invoices are used for B2C transactions, where the buyer is typically a consumer, and the transaction volume is lower.
- Format: Similar to tax invoices, simplified tax invoices are also generated electronically but usually have fewer data fields.
- Digital Signature & QR Code: Simplified invoices must also include a digital signature and QR code to ensure authenticity and compliance.
- Submission Requirement: Unlike tax invoices, simplified tax invoices do not need to be sent to ZATCA immediately but must be reported at regular intervals.
E-Invoice Formats:
- XML Format: All e-invoices in Saudi Arabia must be generated in the XML format to ensure compatibility with ZATCA’s e-invoicing system.
- PDF/A-3 Format: In addition to the XML file, businesses can attach an invoice in PDF/A-3 format for customer-friendly viewing, but the XML version is the one that is processed and validated by ZATCA.
Key Fields in E-Invoices:
- Seller and Buyer Information: TIN, names, and addresses of both parties.
- Invoice Date and Unique Invoice Number.
- Line Item Details: Description of goods/services, quantity, and price.
- Tax Information: Applicable VAT rates and total tax amounts.
ZATCA’s e-invoicing system aims to enhance transparency, reduce tax evasion, and improve the efficiency of tax collection processes by requiring businesses to comply with these invoice types and formats.