Your Questions Answered: Saudi Arabia E-Invoicing Mandate

In our recent webinar, the team at Sovos discussed the upcoming Saudi Arabia e-invoicing mandate. The webinar covered the finalised rules for Phase 1 of the e-invoicing regime which is due to go live on 4 December 2021 as well as updates to phase 2.

There were plenty of questions we didn’t have time to answer during the webinar. Below are the answers to these questions.

Relating to file naming conventions based on the government’s guidelines, Section 6.9 says the naming convention will require “VAT Registration (tax registration number), Timestamp (date and time at the point of invoice generation), Invoice Reference number”.

Is the VAT registration referring to the legal entity or company code VAT registration number of a company or does the government want to use the customer’s VAT number? Also, does the datestamp have a specific format (eg. dd.mm.yyyy or any)?

According to the E-invoice XML implementation Standard section 14, Electronic files shall be named according to the following convention: Seller Identification+ “_”+Date+Time”_”+IRN.xml

The following is provided as an example: 3xxxxxxxxx1xxx3_20210526T132400_2021-05-26-23555.xml

Therefore, the supplier’s VAT number must be used. Please see the relevant section for date and time rules. You can follow the format provided in the example.

Is XML for outbound documents required for phase 1?

Any structured electronic format is permitted for the first phase for e-invoice generation.

According to the Detailed Guidelines: “Electronic invoices can be printed or included within human readable formats in order to be shared with the buyers. Starting on 4 December 2021 persons subject to the E-Invoicing Regulation may utilize any format as a human readable format to share their electronic invoices, but once the integration resolution comes into full force starting in January 2023 human readable invoices must either be a PDF/A-3 or, for simplified e-invoices, paper with the specified information visible, including a QR code.”.

Any format can be used for the first phase for invoice exchange purposes. However, for the second phase, PDF A3 with embedded XML must be sent to the customer as a human readable version or an XML invoice can be sent as an electronic version itself.

Under what circumstances is a QR code required?

During phase 1, a QR code is only required on ‘simplified’ e-invoices, which in practice usually means B2C invoices. From phase 2, a QR code will be required on ALL invoices, whether B2B, B2G or B2C.

What is a cryptographic stamp?

This is a technical digital signature.

Is phase 2 more like real-time reporting rather than a clearance mandate?

In the second phase, B2B invoices will operate under a clearance regime while B2C invoices must be reported to ZATCA’s platform within 24 hours of issuance.

What is the UUID that’s required by phase 2 of the KSA reform?

UUID: Unified Unique Identification Number, is a 128-bit number used to identify information in computer systems used for e-invoice generation. UUIDs generation scheme ensures to a high probability that the generated number is globally unique without the need to check a central database.

The compliant e-invoice solution must be able to generate a Universally Unique Identifier (UUID) in addition to the electronic invoice sequential number which identifies and distinguishes each VAT tax invoice, simplified tax invoice, and their associated notes. (This requirement is applicable in the second stage).

Are the storage requirements only for export documents?

All electronic invoices, credit and debit notes must be stored in accordance with the storage rules. It is not limited to export invoices.

Are you expecting KSA to move the 4 December date?

We do not expect any delay to the go live date.

Is the scope for domestic invoices only?

Export transactions are also in the scope of e-invoicing.