Learn about the steps to issue an e-invoice in Saudi Arabia, along with compliance methods and requirement fulfillment with Wazen ERP.

E-invoicing has become one of the key pillars of digital transformation in the Kingdom of Saudi Arabia, as the Zakat, Tax, and Customs Authority (ZATCA) has mandated this system for all taxpayers subject to Value Added Tax (VAT).The e-invoicing system aims to enhance transparency, combat tax evasion, and facilitate business transactions by adopting unified digital invoices integrated with government platforms.

What Is an E-Invoice?

An e-invoice is a document issued in a digital format (XML or PDF/A3 containing a QR code), generated and processed through electronic systems compliant with ZATCA requirements.It serves as legal proof of commercial and tax transactions, replacing traditional paper invoices.

Types of E-Invoices

• Electronic Tax Invoice: Used for transactions between VAT-registered entities (B2B).
• Electronic Simplified Invoice: Used for transactions with the end consumer (B2C).

Objectives of E-Invoicing in Saudi Arabia

• Increase tax compliance and reduce tax evasion.
• Enhance transparency between seller and buyer.
• Simplify tax auditing and data collection.
• Automate reports and tax returns.
• Support the digital economy and transformation within Vision 2030.

Phases of Implementing E-Invoicing in Saudi Arabia

The Zakat, Tax, and Customs Authority (ZATCA) divided the e-invoicing project into two main phases:

1. Phase One – Generation and Storage

📅 December 4, 2021

• Mandatory issuance of electronic invoices instead of paper invoices.
• Inclusion of QR codes in simplified invoices.
• Electronic storage of invoices without any manual edits.

2. Phase Two – Integration and Connectivity

📅 Gradually implemented since January 1, 2023

• Integration of taxpayers’ systems electronically with the authority’s platform (FATOORA).
• Real-time transmission of invoices to the authority for validation or reporting.
• Phased application based on the taxpayer’s annual revenue size.

Steps to Issue an E-Invoice

Select a Compliant System: Choose a system or service provider approved by ZATCA.
Configure the System: Set up tax configurations (VAT number, tax rate, business data).
Generate the Invoice: Create the e-invoice including:
• Invoice serial number.
• Buyer and seller information.
• Tax value.
• QR code.
Send and Store: Send the invoice to FATOORA platform and keep a secure electronic copy.

Requirements for Activating E-Invoicing

• Valid commercial registration and VAT number.
• A technically compliant system (ERP, POS, or cloud accounting solution such as Wazen).
• Internet connectivity to ensure integration with the authority.
• Digital signature or certified digital certificate (for phase two).

Key Components of an E-Invoice

Each invoice must include mandatory elements such as:

• Seller’s name, address, and registration number.
• Buyer’s name and VAT registration number (for tax invoices).
• Date and time of issuance.
• Invoice value before and after tax.
• VAT rate and value.
• QR code (for simplified invoices).

Penalties and Fines for Non-Compliance

Failure to comply with e-invoicing requirements may lead to:

• A fine of up to SAR 50,000 for disabling the e-invoicing system.
• A fine of SAR 5,000 for not issuing an e-invoice.
• Penalties based on the number of violations and delay in corrective action.

Benefits of E-Invoicing for Businesses

• Reduced administrative and paper costs.
• Faster financial collection processes.
• Easier generation of tax and financial reports.
• Enhanced trust with clients and suppliers.
• Minimized human errors.

Wazen System and E-Invoicing

Through Wazen accounting system, Saudi businesses can fully comply with ZATCA’s e-invoicing requirements by:

• Issuing e-invoices with a single click.
• Direct integration with the FATOORA platform.
• Supporting both simplified and tax invoices.
• Automatically generating QR codes.
• Producing automated tax reports for monthly and quarterly filings.
• Storing invoices in a secure cloud archive.

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Key Events and Exhibitions Related to E-Invoicing

• Zakat and Tax Forum – Organized by ZATCA.
• Fintech Conferences – Showcasing automation and invoicing solutions.
• Digital Transformation Events – Highlighting innovations in cloud systems.

Frequently Asked Questions About E-Invoicing

Is e-invoicing mandatory for everyone?Yes, it is mandatory for all taxpayers subject to VAT.

What is the difference between simplified and tax invoices?Simplified invoices are for end consumers (B2C), while tax invoices are for business-to-business (B2B) transactions.

Can an e-invoice be modified or canceled? No, you must issue a credit or debit note according to ZATCA regulations.

Is a regular PDF enough as an e-invoice?No, the invoice must be in XML or PDF/A3 format containing a QR code.

How can I know if my system is compliant?Your system or service provider must be listed among ZATCA’s approved solutions.

In Conclusion

The shift toward e-invoicing is not just a regulatory requirement, but an opportunity to accelerate operations, improve efficiency, and reduce costs.Businesses that adopt this system early will gain a competitive edge in the Saudi market and be better prepared for Phase Two of integration and connectivity.

With Wazen, you can manage your invoices seamlessly and ensure full compliance with ZATCA’s requirements easily and professionally.

Start your smart 14-day free trial now, with no financial commitments or limitations, and enjoy the full features and tools of the Wazen system.

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