From December onward each time a business transaction is made in Saudi Arabia, the seller is bound by the law to give the buyer an electronic invoice rather than that old paper bill that needed to be stashed away in a file for safekeeping.
The first phase of electronic invoicing in Saudi Arabia has begun, affecting all taxpayers liable to VAT in the Kingdom – excluding those who do not reside there – and any third parties that issue tax invoices on the taxable supplier’s behalf.
The electronic billing system is a mechanism that tries to convert the process of sending invoices and paper receipts into an electronic process that enables the exchange of invoices, debit and credit statements, and their processing in an electronic format arranged between the seller and the buyer.
The Zakat, Tax, and Income Authority explained that the first stage of electronic invoicing, which is the stage of electronic issuance and preservation, is to entirely discontinue utilizing handwritten invoices or invoices created on computers using computers text editors, or number analysis applications.
This stage also includes making sure that electronic invoices are issued and saved with all elements, including the QR Code and invoice serial number for simplified tax invoices, and the tax number of the buyer registered in the value tax Added, as well as guaranteeing that the invoice address.
The second phase, which is the integration and linkage stage, will be implemented in stages for each category of taxpayers beginning on January 1, 2023, and taxpayers in the target group will be notified at least six months in advance.
The Authority noted the high level of awareness among a large proportion of taxpayers, as well as their readiness to implement the first phase of the project before the deadline, confirming its role in preparing the private sector and raising their awareness of the requirements for using electronic invoicing.
The Authority has also developed a guide on its website that includes details of all the necessary information about electronic billing, such as definitions, application stages, requirements for each of the two phases, and prohibitions on electronic billing solutions.
Moreover, the Authority had previously announced that the violation of not issuing and keeping invoices carries a fine of 5000 riyals, as does the breach of not including the QR Code in the simplified tax invoice and the violation of not writing the facility’s value-added tax registration number.
In addition, purchasing with tax invoices and failing to notify the Authority of any fault that prevents the issuance of electronic invoices will result in a warning to the facility while deleting or amending electronic invoices after they have been issued will result in a fine of 10,000 riyals.