Elements of Electronic Invoices and Tax Invoices in Saudi Arabia and the Compliance Guide

In light of the digital transformation taking place in the Kingdom of Saudi Arabia, electronic invoices and tax invoices have become a fundamental element in the operations of companies and establishments, not only for regulatory compliance, but also for improving efficiency, reducing errors, and enhancing customer experience.

Since the implementation of the E-Invoicing Regulation by the Zakat, Tax and Customs Authority (ZATCA), every establishment has been required to comply with specific elements and precise procedures when issuing invoices.

In this article, we provide a comprehensive explanation of the elements and requirements of electronic and tax invoices, and how Wazen ensures full compliance with ease.

First: What is an Electronic Invoice?

An electronic invoice is a financial document that is created, issued, and stored in a structured digital format, such as XML or PDF/A-3 with an embedded XML file, through an electronic invoicing system compliant with ZATCA specifications.

These invoices are issued for VAT-taxable transactions as well as other transactions, and they are sent and stored electronically without the need for paper.

Second: What is a Tax Invoice?

A tax invoice is a type of electronic invoice used for transactions subject to Value Added Tax (VAT). It contains all standard electronic invoice data in addition to mandatory tax details such as the VAT registration number, tax rate, tax amount, and total amount inclusive of tax.

Tax invoices are typically issued in transactions between VAT-registered businesses (B2B).

Third: Basic Elements of an Electronic Invoice

According to ZATCA requirements, an electronic invoice must include the following elements:

• Invoice title (such as “Electronic Invoice” or “Tax Invoice”).
• A unique, non-repeated invoice number.
• Date and time of issuance.
• Seller’s name, address, and commercial registration number.
• Seller’s VAT registration number (if VAT-registered).
• Buyer’s name, address, and commercial registration number (if applicable).
• Detailed description of goods or services, including quantity and unit price.
• Total amount before tax.
• VAT rate and tax amount.
• Total amount inclusive of tax.
• QR Code; mandatory for simplified invoices.
• Electronic signature or cryptographic stamp; mandatory in Phase Two (Integration Phase).

Fourth: Additional Elements for Full Tax Invoices

In addition to the basic elements, full tax invoices must include:

• Buyer’s VAT registration number (if VAT-registered).
• Buyer’s address.
• Agreed payment terms.
• Shipping or delivery details (if applicable).

Fifth: The Difference Between an Electronic Invoice and a Tax Invoice

An electronic invoice is any invoice issued, processed, and stored electronically through an approved invoicing system. This includes both simplified invoices and tax invoices.

A tax invoice, however, is a specific type of electronic invoice used for VAT-taxable transactions and includes additional mandatory tax data.

In other words, every tax invoice is an electronic invoice, but not every electronic invoice is a tax invoice.

Sixth: Requirements of an Approved Electronic Invoicing System

For invoices to be valid and approved by ZATCA, they must be issued through an invoicing system that complies with the following:

• Non-editable and non-duplicable invoice numbering.
• Invoice storage for at least 6 years.
• Integration with ZATCA systems when required.
• Inclusion of QR data in simplified invoices.
• Digital signing of invoices in Phase Two.

Seventh: The Role of Wazen System in Issuing Electronic and Tax Invoices

Wazen provides companies and establishments with an integrated platform to issue electronic and tax invoices in accordance with ZATCA requirements:

• Create invoices with one click, automatically including all mandatory elements.
• Generate and validate QR codes.
• Direct integration with ZATCA systems in Phase Two.
• Secure cloud archiving exceeding the regulatory retention period.
• Analytical sales and tax reports to support accurate financial decisions.

Eighth: Penalties for Non-Compliance

• Financial fines for not issuing invoices according to requirements.
• Suspension of VAT registration or certain services.
• Obligation to correct non-compliant invoices and pay tax differences.

Ninth: Tips to Ensure Compliance

• Train employees on using the electronic invoicing system.
• Rely on an approved system like Wazen to avoid errors.
• Review invoices before submission.
• Continuously follow ZATCA updates and requirements.

Saudi Electronic Invoice

The Saudi electronic invoice is one of the most significant initiatives launched by the Zakat, Tax and Customs Authority to transform traditional paper invoices into a fully integrated digital system. It aims to enhance financial transparency, facilitate auditing processes, reduce tax evasion, and improve business efficiency within the Kingdom.

Wazen enables establishments to issue electronic invoices easily and in compliance with official regulations, whether for local invoices or export invoices, while securely storing all documents digitally and allowing retrieval at any time.

It also provides accurate reports that help companies monitor financial performance and analyze revenues and expenses daily, supporting strategic financial decisions based on precise data.

Electronic Invoice Specifications

The Zakat, Tax and Customs Authority has defined a set of specifications for electronic invoices to ensure standardization and legal compliance. These specifications include entering essential data such as customer name, commercial registration number, invoice number, issue date, details of goods or services, quantities, prices, and VAT value.

The invoice must be stored in a retrievable digital format and linked to the Authority’s electronic platform for instant verification.

Wazen enables companies to implement all these specifications accurately through a user-friendly interface, ensuring compliance with official standards, minimizing human errors during invoicing, and integrating with other accounting systems for comprehensive financial management.

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Frequently Asked Questions (FAQ)

1. Is a simplified invoice considered a tax invoice?

Yes, if it includes the required tax elements for simplified transactions.

2. What is the approved format for an electronic invoice?

XML or PDF/A-3 with an embedded XML file.

3. Is the QR code mandatory on all invoices?

It is mandatory for simplified invoices and optional for full tax invoices.

4. How long must electronic invoices be retained?

At least 6 years from the date of issuance.

5. Can invoices be issued manually?

No, they must be issued through an approved electronic invoicing system.

What is the New Electronic Invoice?

The new electronic invoice is an advanced digital version of traditional invoices launched by the Zakat, Tax and Customs Authority in Saudi Arabia as part of the digital transformation plan to enhance financial transparency and combat tax evasion.

It simplifies invoice issuance, provides secure financial record storage, and allows direct submission to the Authority for instant verification. Wazen enables businesses to create new electronic invoices easily, including all essential data such as goods and services details, prices, VAT amounts, and customer information, ensuring legal compliance and simplified daily accounting management.

Is Electronic Invoicing Mandatory?

Yes, electronic invoicing is mandatory for all establishments registered with the Zakat, Tax and Customs Authority, including small, medium, and large companies, in accordance with VAT regulations. The objective is to regulate financial transactions, reduce accounting errors, and ensure compliance with local laws.

Wazen simplifies compliance by supporting direct issuance of electronic invoices and synchronization with the Authority’s platform, reducing manual processes and ensuring financial data accuracy.

What is an Electronic Invoice?

An electronic invoice is an approved digital document issued to document sales or service transactions. It includes all required financial transaction details such as customer name, commercial registration number, goods or services details, prices, and VAT where applicable.

It is easy to issue, digitally stored, and electronically reviewed. Wazen is one of the leading solutions enabling businesses to issue electronic invoices accurately and flexibly while managing financial records, preparing analytical reports, and ensuring full compliance with the Authority’s requirements.

What Are the Specifications of an Electronic Invoice?

The Authority defines specific electronic invoice specifications to ensure standardization and legal compliance. These include customer name, commercial registration number, invoice number, issue date, goods or services details, quantities, prices, and applicable tax amount.

Invoices must be stored securely in digital format and be verifiable by the Authority at any time.

Wazen enables businesses to issue invoices according to these specifications while maintaining organized financial records and easily generating reports for auditing or financial analysis.

What is an Electronic Tax Invoice?

An electronic tax invoice is a specific type of electronic invoice used to document VAT-taxable transactions. It contains all required data to determine the applicable tax, including the seller’s VAT registration number, details of goods or services, pre-tax and post-tax prices, and the imposed tax amount.

Wazen provides a comprehensive solution for issuing electronic tax invoices, ensuring full compliance with tax regulations, easy review, and accurate management of all tax-related financial transactions, helping companies reduce legal risks and improve tax management efficiency.

If you are a business owner or financial manager seeking full compliance with the requirements of the Zakat, Tax and Customs Authority and want to ensure accurate and compliant issuance of electronic and tax invoices, it’s time to try Wazen.

With Wazen, you can create invoices with one click, automatically include all mandatory elements, integrate directly with the Authority’s platform, and securely archive invoices for years.