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e-FATOORA System in KSA

KSA has a special name for their e-Invoice system “e-Fatoora Portal” and also examples of both clearance model and real time invoice reporting model. B2B and B2C invoices also credit and debit notes included in the regulation. Phase 1 has been already mandatory since December 4, 2021 for all resident businesses in KSA. Phase 2 becomes mandatory for specifically announced groups from January 2023 to 2024.

The Kingdom of Saudi Arabia became one of the pioneers of its region, namely the Middle East, in the implementation of e-Invoice and reporting. It began to be actively clarified both legally and technically by the tax authority in 2020-2021. The process is managed, monitored and controlled by Zakat, Tax and Customs Authority (ZATCA).B2B(named e-Invoice) and B2C(named e-report) transactions were included in the regulation. E-Invoices are specifically called Standard Tax Invoice and e-Reports are called Simplified Tax Invoice.

The implementation process was divided into two main phases, generation and integration. Now let’s look at these phases in more detail.

First of all, the generation phase is effective on December 4, 2021 and covers all taxpayers established in KSA. Compared to Phase 2, implementation requirements are not  difficult to apply.

Requirements expected from taxpayers in Phase 1;

  • Creating the invoice in electronic format, file format not specifically specified,
  • Archiving the generated invoice and presenting it if requested by ZATCA
  • Only Simplified tax invoice have QR code and
  • Each file created has an IRN number, this number must be sequential.

Integration phase is effective from January 1, 2023 but not for all resident taxpayers. ZATCA informed taxpayers at least 6 months before the deadline. Taxpayers divided into groups based on their income subject to VAT for the period 2021-2022. Released phase 2 implementation timeline as follows;

  • From January 2023 subject to all taxpayers whose VAT revenue for the year 2021 exceeds 3 billion SAR.
  • From July 2023 determined threshold is 500 Million SAR
  • From October 2023 all taxpayers whose VAT revenue exceeds 250 Million SAR will be obligated.

Phase 2 requirements which taxpayers have to apply;

  • Issuing the invoice in XML format or PDF/A-3 format,
  • Taxpayers ERP system must be integrated with Fatoora Portal
  • Both Standard (B2B) and Simplified Tax Invoice(B2C) must have QR code and
  • Both of the Invoices must have a digital signature(cryptographic stamp). Standard Tax Invoice signed by ZATCA and Simplified Tax Invoice must be signed by taxpayer. Because of that B2B invoice example of clearance model and B2C invoice is example of invoice reporting.
  • Each file must have UUID(universally unique identifier) and IRN(Invoice Reference Number),
  • Archive invoices both in local or cloud server

How can SNI help you?

With the SNI Solution we have developed, the data coming from the user's ERP Independent system is extracted and converted into the format specified in the regulation and the necessary technical details are added such as QR code, digital signature and UUID. The created invoices are sent to the portal online via published APIs.