In Saudi Arabia, electronic invoicing has been implemented in two phases:

1. Phase 1 (Effective from December 4, 2021):
   • Taxpayers are required to issue and store electronic invoices using an electronic invoicing system that complies with the General Authority of Zakat and Tax (GAZT) requirements.
   • This phase includes all individuals subject to the Electronic Invoicing Regulation, as well as any other party issuing tax invoices on behalf of VAT-registered suppliers.
2. Phase 2 (Gradual Implementation from January 1, 2023):
   • Known as the “linking and integration” phase, it requires taxpayers’ electronic invoicing systems to be linked with the GAZT platform (“Fatora”).
   • E-invoices must be issued in the required format.
   • Implementation will occur gradually, with GAZT notifying taxpayers of the second phase at least 6 months in advance.

Requirements for the second phase include:

• Issuing e-invoices in a format that adheres to specified requirements.
• Including additional fields, such as the Cryptographic Stamp, to ensure the reliability and security of e-invoice data and verify the identity of the issuer.

Furthermore, the technical solution used for e-invoicing must align with the specifications and requirements outlined in the Electronic Invoicing Regulation.

Invoicing Types:

In the second phase of electronic invoicing, there are two main types of e-invoices based on the type of transaction:

1. Business-to-Consumer (B2C) E-Invoices:
   • The seller issues an e-invoice to the customer, including all elements of the cash invoice.
   • The seller provides the invoice to the buyer.
   • The seller stores the e-invoice electronically.
   • The seller shares the invoice with the General Authority of Zakat and Tax (GAZT) within a time frame of no more than 24 hours, using the technical solution linked to their establishment via the “Fatora” platform.
2. Business-to-Business (B2B) E-Invoices:
   • The seller issues an e-invoice, including all elements of the tax invoice.
   • The seller shares the invoice with GAZT through electronic linkage.
   • The invoice is approved by GAZT, and the approved e-invoice is re-sent to the seller.
   • The seller shares the approved e-invoice with the buyer in a readable format.
   • The seller stores the e-invoice electronically.

The importance of the electronic invoicing system includes:

• Facilitating procedures for customers and saving time and effort.
• Ensuring greater accuracy and quickly detecting attempts at manipulation or counterfeit invoices.
• Enhancing transparency in all transactions within Saudi Arabia.
• Unifying the documentation and auditing process for invoices, benefiting businesses, individuals, and the government.
• Diversifying the sources of the Saudi economy beyond oil and petroleum products.
• Reducing administrative expenses significantly.
• Moving away from paper-based transactions, which is environmentally friendly.

If you have any further questions or need additional clarification, feel free to ask! 

Advisory@logic-tec.com