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E invoicing KSA Phase 2 | Complete Overview of Fatoorah Phase 2

The following post tells us everything about the new KSA E Invoicing regulations and its application to your business. Stay compliant with expert advice from Taxilla, an EGS

ZATCA eInvoicing (Fatoorah) - Phase 2

KSA - ZATCA eInvocing PHASE 2 (starting from January 1st, 2023), known as the Integration phase and rolled-out in waves by targeted taxpayer group, will involve the introduction of Phase 2 technical and business requirements for electronic invoices and electronic solutions, and the API integration of these electronic solutions with ZATCA's systems. ZATCA/GAZT will notify taxpayers of their Phase 2 wave at least six months in advance, and the enforcement date for the first target group will not be earlier than January 1st, 2023. The goal of this phase is to integrate electronic solutions with ZATCA's systems. This will streamline communications and improve efficiency overall. Once fully implemented, businesses will be able to take advantage of all the benefits that come with using electronic invoicing. This includes reducing paper waste, saving time on data entry tasks, improving Accounts Payable (AP)/ Accounts Receivable (AR) processes and cash flow management. There are many benefits that businesses can look forward to once ZATCA invoicing is fully operational. However, achieving this requires a smooth transition during the Integration phase.

Functional & Technical Requirements of E-invoicing Saudi Arabia (Fatoorah)

E-Invoice in XML format with below details:

• Additional Field related to Seller, Buyer, Discount, VAT, Tax Code, taxable & payable amount, Payment Method, Bank details
• Previous and Current Invoice hash
• UUID/GUID- Universal/Global Unique Identifier
• Invoice tamper-resistant counter
• QR Code:
• Invoice Hash, Cryptographic stamp & Public Key to generate it
• Cryptographic stamp
• Generated by ZATCA/GAZT for Standard e-Invoice & by EGS for Simplified e-Invoice
• Invoice archival for minimum 7 years with real time accessibility as per VAT regulations
• Printable pdf in PDF/A-3 format with embedded XML
• Invoice clearance:
  • Electronic Invoice: Sharing of invoices with the E-Invoicing Integration Portal in real-time via API (for clearance)
  • Simplified electronic Invoice: Not mandated
• Invoice reporting:
  • Electronic Invoice: Not mandated
  • Simplified electronic Invoice: Upload of invoices to the E-Invoicing Integration Portal via API whenever connected
  • Prohibited functions in which the Compliant Solution must not have:
    • Anonymous access
    • Ability to operate with default password
    • Absence of user session management
    • Allow alteration or deletion of generated e-invoices or their associated notes
    • Allow for log modification/ deletion
    • Generated with inaccurate timestamps
    • Non-sequential log generation
    • Invoice counter reset
    • Allow ability to generate more than one invoice sequence at any given time
    • Export of stamping keys
    • Time change

  Clearance Model (Tax Invoice):

  Clearance of B2B and B2G invoices from the ZATCA/GAZT is required for both standard e-invoices and related credit or debit notes issued by any VAT-registered resident taxpayers of Saudi Arabia subject to the e-Invoicing Regulations. The taxpayers must declare and get their invoices cleared from the ZATCA via its API integration, which is mandatory starting January 2023. One must note that clearance is not compulsory for e-invoices during the first phase of e-invoicing in KSA.

  Reporting Model (Simplified Tax Invoice):

  All Business-to-Consumer (B2C) transactions also classified as simplified e-invoices are required to be reported to the ZATCA/GAZT for VAT purposes. This includes electronic invoices and related credit or debit notes issued by any VAT-registered Saudi Arabian resident taxpayer subject to the e-Invoicing Regulations. The ZATCA requires that simplified e-invoices and notes be reported to its e-invoice portal within 24 hours of issuance. Such e-invoices must bear a cryptographic stamp which is provided by E-invoicing Generation Solutions (EGS) like Taxilla, instructed under the fourth clause of the e-Invoicing Regulations. Such E-invoice reporting to the ZATCA/GAZT must be done via integration directly with the ZATCA portal. E-invoicing works as a near-real-time transaction system and does not require immediate reporting to the ZATCA. The authority will verify it, acknowledge the simplified e-invoice and intimates it to suppliers

  Key Features of KSA E-invoice Phase 2

  • Internet Connectivity and Onboarding via API Integration or Portal
  • Invoice Reporting via API Integration
  • Invoices in PDF/A3 format
    • Support of prohibited functions as stated by ZATCA guidelines
    • Information security and anti-tampering features
    • Data Storage and Archival

    Businesses should make sure they are staying up to date on all the latest information from ZATACA so that they can be prepared for any changes that come their way. They should also begin familiarizing themselves with the new requirements and get started on planning for how they will integrate their own electronic solutions with ZATCA's systems. By doing all this in advance, businesses can make sure they are ready for whatever comes next in Phase 2 of ZATCA e Invoicing.

    ZATCA's Sandbox Environment to test APIs required for Integration

    • Reporting API: This API used for submitting Simplified e-invoices, credit or debit note to the ZATCA backend system within 24 hours of generations as part of the Reporting process.
    • Clearance API: This API used for submitting Tax e-invoices, credit or debit note to the ZATCA backend system in real time as part of the Clearance process.
    • Compliance Cryptographic Stamp Identifier (CSID) API: This API Used for submitting test CSRs (Certificate Signing Requests) to the ZATCA backend system as part of the Onboarding and renewal process
    • Production Cryptographic Stamp Identifier (CSID) API (for Onboarding) : This API will be used to submit a Request ID to a test ZATCA backend system as part of the Onboarding process
    • Production CSID API (for Renewal): This API should be used to test submitting a Request ID to the ZATCA backend system as part of the Renewal process
    • Compliance Checks APIs (for Onboarding / Renewal): These APIs should be used to test the compliance check for the device / solution unit (EGS) as part of the Onboarding and/or Renewal processes. The compliance checks include checking compliance of Standard and/or Simplified documents when Clearance is enabled (Compliance Invoice API) or when Clearance is disabled (Compliance Invoice Clearance Disabled API);

    The sandbox includes test cases, sample data, and documentation that will help businesses understand how to use the APIs. ZATCA is also offering technical support to help businesses with any questions they may have.

    Why Choose Taxilla for your E invoicing Solutions?

    Taxilla has successfully integrated the KSA e Invoicing solution with ZATCA sandbox environment. In addition to the mandated requirements, Taxilla is also offering the following features as part of the KSA Fatoorah solution that are built on top of our robust eInvoicing platform used by top MNCs operating in over 20 different countries

    • 100% ZATCA compliant & Zero Penalties
    • ERP integrations with option for manual or excel upload
    • Source friendly file format and data preparation from single/multiple sources
    • Pre-validations, Tax determination and computations
    • Transactional or Batch processing
    • Digital signing
    • Arabic support
    • Custom printable invoice & E-Print of Invoice based on the printer configuration
    • E-Delivery of Invoice and Automated configurable workflows
    • Efficiency Improvements | Cost Savings | Ease of Use | Data standardization | Enhanced Quality.

    Our platform is fully customizable, so it can be easily adapted to fit the specific needs of any business. And because it's cloud-based, it can be accessed from anywhere, at any time. Reach out to us for more information or for a quick demo of our solution.