The Zakat, Tax and Customs Authority (ZATCA) has recently announced that Zoho is a qualified e-invoicing solution provider for businesses in the Kingdom of Saudi Arabia.
VAT was implemented in the Kingdom of Saudi Arabia in 2018 with a standard rate of 5% and specific, limited types of transactions designated as zero-rated or exempt. In mid-2020, to mitigate the effects of the global pandemic, the VAT rate was hiked to 15%. The introduction of e-invoicing is the next big change to the VAT system, and it will take effect on 4 December 2021.
The intention of this change is to streamline the invoicing process, boost VAT compliance, and improve the tax revenue of the Kingdom. E-invoicing ensures that uniform electronic invoice formats are followed, which increases the interoperability and readability of invoices. This procedure also helps the tax authorities to find fake invoices, by matching input tax credit to output tax on the ZATCA portal.
What is e-invoicing?
E-invoicing is an authentication technique in which businesses generate electronic invoices. The tax invoices are submitted to the ZATCA portal in a common, machine-readable format and sent to the buyers only after being electronically authenticated. These e-invoices include all the information that would be found in a paper invoice, like date, customer’s details, goods or services sold, invoice amount, and VAT breakup, but they are stored electronically and include some additional necessary fields. All resident taxpayers in Saudi Arabia who issue tax invoices, and third parties who issue tax invoices on behalf of residents, are subject to e-invoicing.
Authenticating invoices before the actual transactions happen reduces the possibility of invoice manipulation. E-invoicing creates a common database for the tax authorities, which helps in tracking B2B, B2G, and B2C transactions on a real-time basis and reduces audits by the tax authorities.
Phases of implementation
Saudi Arabia plans to implement the e-invoicing system in two phases.
The first phase begins on 4 December 2021. All taxpayers should be able to create, edit, and store e-invoices in specified electronic formats on or before this deadline.
The second phase of implementation is set to have a staggered start, beginning on 1 January 2023. By this date, the e-invoicing solutions that taxpayers use should be integrated with the ZATCA’s e-invoicing portal for Continuous Transaction Controls (CTC) to work. In this phase, the taxpayers must start getting their invoices authenticated by the ZATCA portal before sending them to buyers.
How can Zoho Books help?
All businesses must submit their invoices, debit notes, and credit notes in specific electronic formats to the ZATCA portal for authentication. Upon successful authentication of an invoice, a Universally Unique Identifier number (UUID) and a QR code are generated and added to the transaction. This makes it a valid e-invoice that the seller can issue to the buyer. With all the necessary features incorporated, Zoho Books is all geared up to make e-invoicing a straightforward process for taxpayers. Here’s how:
Easy one-time setup
Just enabling the e-invoicing option in Zoho Books gets you all the necessary features and automation to upload invoices directly to the ZATCA e-invoicing portal. Furthermore, you can customize your invoice templates to include QR codes and e-signatures.
Curb unauthorized access
Per the ZATCA guidelines, we do not allow anonymous access to transactions and records. Users need to create secure passwords, and can use multi-factor authorization to protect their accounts; they aren’t allowed to use the software with a default or factory password. The admin user can assign access rights to all other users so that they have access only to the appropriate modules and features for their roles. The system also tracks user sessions to create logs that can be accessed in real-time if necessary.
Create and manage e-invoices and associated notes
Smart validation: Zoho Books allows you to create and print error-free e‑invoices with all the mandatory fields. The transactions are preemptively validated during invoice creation to identify violations, incorrect data entry, and missing mandatory fields.
Bulk e-invoices: You can push invoices and their associated notes to the ZATCA portal in bulk for authentication. Your transactions will be authenticated and e-invoices ready within seconds.
E-invoice adjustments: Made an error in an e-invoice? Zoho Books allows you to create credit or debit notes with appropriate values to amend the error.
Transaction archive: Businesses are required to maintain records of all their transactions for a period of 5 years. We allow the users to export the transactions and archive them for the full retention period.
Protect your transactions and records
Per the ZATCA guidelines, altering invoices and their associated notes, or tampering with the timestamps or log entries, isn’t allowed. Zoho Books helps avoid such compliance mistakes by blocking users from altering or deleting transactions or tampering with their timestamps. The software’s activity logs show the sequential stage-by-stage evolution of each transaction, and they aren’t editable either.
Want to see it work?
The implementation of e-invoicing in Saudi Arabia is expected to be a game-changer for businesses across all sectors and it is high time you start preparing for this new system. Adopting Zoho Books while transitioning to e-invoicing will bring you the benefits of issuing electronically generated paperless invoices and complying with all the guidelines issued by ZATCA.
We are thrilled to bring you a series of free webinars, guides, FAQs, and help documentation on e-invoicing in Saudi Arabia to help you set up and use Zoho Books and adopt this new change.
Want to try it yourself? Write to us at email@example.com and we’ll provide early access for you! Feel free to leave us a comment below if you have doubts or need clarification on anything related to e-invoicing.