Andersen

2022/01/03

The launch of the electronic invoicing projects by the Zakat, Tax, and Customs Authority is considered one of the most important national projects that will constitute a tangible impact and a qualitative leap in the national economy. The main objectives are:

1. Stop paper invoices as they are time-consuming in terms of printing and postal delivery.
2. Stop not issuing revenue invoices.

Accordingly, electronic invoicing will achieve more effective and efficient communication. Andersen in Saudi Arabia team will keep you informed of any updates, explain everything related to this system in this article, and answer frequently asked questions in an easy and simple way. Stay tuned!

Electronic Invoicing Concept

It is a procedure that transforms all financial notices and invoices from a paper-based to an electronic format that allows both the seller and the buyer to send and save the invoice and notices easily and ensure that it is not modified or tampered with.

Electronic Invoice Benefits

Electronic systems have become a cornerstone in many complex transactions such as electronic payment. It enables the paying bills, salaries, in addition to the ability to make purchases by paying via an electronic wallet without fear of fraud. In order to reduce ambiguities related to the Zakat, Tax, and Customs Authority initiative, it is necessary to clarify the benefits of the electronic invoicing system where paper-based invoices are replaced by a modern electronic format. These benefits are as follows:

• Increasing compliance with tax obligations to verify commercial transactions.
• Enhancing companies’ legislative compliance.
• Eliminate commercial cover-up by following up with the invoices.
• Fighting the hidden economy.
• Providing a mechanism for auditing invoices and thus reducing errors.
• Promoting fair competition.
• Improving consumer protection, experience, and relationship with the supplier.
• Organizing financial matters.

Electronic billing features

1. Safety and speed

By using the electronic invoice system, a large number of data and invoices will be transferred and managed quickly and effectively, thus helping you to get rid of manual work, printing, and storage. Furthermore, the time taken to prepare the electronic invoice is much less than the time taken to prepare the paper-based invoice.

2. Ease of managing and organizing invoices

Traditional invoicing methods increase the possibility of damage and loss, but with the electronic invoice system, you will be able to keep all the payment data in an organized electronic format that can be easily accessed.

3. Electronic Invoices are tamper-free

By implementing of electronic billing, it becomes difficult and even impossible to modify or tamper with the invoice or notifications after it is issued and approved.

4. Safe for the environment

The electronic invoicing system is environmentally friendly because there is no need to use paper again.

Important Electronic Invoicing Terminologies

1. Electronic invoice

It is an invoice issued in an electronic format that contains all the requirements of the tax invoice through an electronic platform.

2. Electronic notifications

Represents the debit and credit notes resulting from the modifications made to the electronic invoice issued.

3. Electronic invoicing systems

The term “systems” refers to all the applications, devices, and laws applicable to any notices and invoices issued by the facility.

Are PDF invoices electronic?

Paper invoices that are scanned and converted into a PDF format are not considered electronic invoices. Therefore, the invoice must be issued from an application dedicated to electronic invoices.

Who is obligated to electronic invoices?

All taxpayers and any other party that issues tax invoices on their behalf are obligated to use the electronic invoicing system, with the exception of institutions and individuals who are not residing in the Kingdom of Saudi Arabia.

The difference between a tax invoice and a simplified invoice?

Tax invoices

They are issued by a tax-registered party to another tax-registered party and contain all the elements of a tax invoice.

Simplified invoices

It is the invoice that is issued by a business to an individual who is not registered for tax or whose value is less than 1,000 Saudi riyals, and it contains all the main elements of a simplified tax invoice.

What services can be requested from Andersen in Saudi Arabia?

Andersen in Saudi Arabia team offers all professional services and consultancy for different sectors and they are capable of providing technical support, in addition to preparing courses aimed to explain and clarify the electronic invoicing system along with the examination service provided by the company to ensure that business owners and companies fulfill all terms and conditions of Zakat, Tax, and Customs Authority.

Is there a difference between debit and credit notices?

Yes, there is a difference in terms of the definition, as Andersen in Saudi Arabia will explain

A debit Note: A notice used to amend the value of a previous tax invoice and show the value in the supply must be increased as it was in the original supply. The tax invoice on which the original supply was issued must be indicated.

 A credit Note: A notice used to amend the value of a previous tax invoice (supply adjustment) due to the supply cancellation, reduction, or value adjustment, and the return of goods and services.

Thus, the credit note is issued and the original invoice in which the supply was made must be indicated.

Is there a specific form for electronic invoices?

Yes, it is important to have a specific form that the customer can read and understand easily.

What are the difficulties of electronic invoicing?

The transition from a paper-based system to an electronic format poses a great challenge to customers and employees. Those challenges include the following:

1. Implementation and application of the new e-invoice system

If you are a business owner and want to implement an electronic invoicing system, it is important that you look for a qualified team to train employees to enable them to use the system efficiently.

2. Information privacy

Customers may refuse to use the electronic invoice, thinking that the data and information are not secure, and that is why they prefer to store the data manually

3. Internet connection

Ensuring a sustainable Internet connection without interruption is impossible, and as soon as any malfunction occurs with the Internet, it hinders the issuance of invoices and the completion of sales operations, thus irritating both the customer and the business owner.

Will the electronic invoicing system be implemented once?

The Zakat, Tax, and Customs Authority stated that the implementation of the e-invoice system will take place in several stages, including the following:

The first stage

This stage is intended for those registered in the value-added tax, and those on their behalf by issuing the electronic invoice and keeping it in electronic form, and it excludes taxpayers who are not residing in the Kingdom of Saudi Arabia.

The second phase

 At this stage, a step is added to link the invoicing process with the Authority to audit and provide an electronic stamp for all tax and simplified invoices.

Transactions subject to electronic invoicing

All individuals who are subject to the electronic invoicing regulation must supply taxable goods and services, whether the customer is a legal person or a non-taxable person.

What is the e-invoicing compliance audit service?

The information is updated from time to time and audited by the Zakat, Tax, and Customs Authority. That is why Andersen in Saudi Arabia offers you a team of Zakat and tax auditors that clarifies all the data required to achieve full compliance with the e-invoicing and VAT regulations requirements in the regulations.

E-invoice Requirements for VAT regulation

After invoices are issued, there are some e-invoice requirements when it comes to keeping records and data. These requirements include the following:

• Keeping records and invoices for a period of no less than 6 years.
• Keeping records in a protected database that allows easy access to records.
• Take security measures to save and protect data.

Electronic invoicing system standards

From time to time, the information is updated and verified by the authority, which is why Andersen in Saudi Arabia As a company or facility owner, to ensure compliance with the electronic invoicing regulations announced by the Zakat, Tax, and Customs Authority and avoid fines or violations, we can summarize your obligations in the following points:

• Stop issuing any paper-based invoices.
• Print QR Codes for a simplified tax invoice.
• Using the sequencing system in electronic invoices to avoid repetition of invoices numbers.
• Ensure that there is no tampering with the electronic invoices, whether for modification or deletion.
• Ensure that the invoicing address is added based on the type.

Are there additional obligations for electronic invoicing?

Those who are subject to the electronic invoicing regulation must abide by the following obligations:

1. Inform the Authority of any technical failures or emergency incidents related to the processes of issuing invoices and electronic notifications through the Authority’s website.
2. Stay away from technical solutions that do not conform to technical specifications.
3. Preserve the components of the invoice, seal encryption, protect the information from copying or illegal use or for any purpose not intended for it.