The General Authority of Zakat and Tax (GAZT) has published draft rules for the controls, requirements, technical specifications and procedural rules for implementing the provisions of the e-invoicing regulation.
In addition to the draft rules, the associated technical specifications (Electronic Invoice Data Dictionary, Electronic Invoice XML Implementation Standard and Electronic Invoice Security Implementation Standards) are available on the GAZT webpage.
The draft rules aim to define technical and procedural requirements and controls for the upcoming e-invoicing mandate (effective from 4 December 2021) and are currently open for public consultation. The deadline to provide feedback on the draft rules is 17 April 2021.
What’s envisaged in the draft rules?
As previously explained, the e-invoicing system will have two main phases.
The first phase begins on 4 December 2021 and requires all resident taxpayers to generate, process and store e-invoices and electronic notes (credit and debit notes). The draft rules state e-invoices and their associated notes must be generated in the defined XML format or PDF/A-3 format (with embedded XML) for the second phase. No specific format is required for the first phase; however, all necessary information must be contained in such invoices and notes.
A compliant solution must have the following features:
- Generation of a Universally Unique Identifier (UUID) in addition to the invoice sequential number (required for the second phase)
- Tamper-resistant invoice counter that cannot be reset, protecting the generated e-invoices and electronic notes from any alteration or undetected deletion
- Enable digital stamps/signatures to ensure authenticity of the origin and integrity of content of the e-invoice and associated notes (required for the second phase)
- Contain some functionalities which enable taxpayers to save e-invoices and electronic notes and archive them in XML format without an Internet connection
- Generation of a cryptographic stamp for each e-invoice or electronic note (required for the second phase)
- Generation of a hash for each generated e-invoice or electronic note (required for the second phase)
- Generation of a QR code
The second phase will bring an additional requirement for taxpayers to transmit e-invoices and electronic notes to the GAZT. Taxable persons must integrate their systems with the GAZT’s systems by using an Application Programming Interface (API).
The draft rules state the timeline for the second phase to begin is 1 June 2022 and targeted groups must integrate with the GAZT’s systems in accordance with the timeline.
As a result of the second phase requirements the Saudi e-invoicing system will be classified as a CTC e-invoicing system from 1 June 2022. A clearance regime whereby an e-invoice will gain a legal effect only if it is approved by the GAZT is expected for e-invoices relating to B2B and B2G transactions. However, a CTC reporting requirement may be prescribed for B2C invoices.
What’s next for Saudi Arabia’s e-invoicing rules?
Saudi Arabia’s e-invoicing rules are expected to be published within the next couple of months following collection of feedback from the public consultation. This will give Saudi taxpayers approximately six months to prepare for the upcoming mandate.
Take Action
Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.