E-Invoice Compliance in Saudi Arabia refers to the requirement for businesses to issue electronic invoices in line with the regulations set by the Zakat, Tax, and Customs Authority (ZATCA). These regulations aim to streamline tax reporting, improve VAT compliance, and reduce fraud. Below are the key points for e-invoice compliance in Saudi Arabia:

1. Mandatory E-Invoicing

• Phase 1 (Generation Phase): Since December 4, 2021, VAT-registered businesses must issue invoices in an electronic format (either XML or PDF/A-3).
• Phase 2 (Integration Phase): Starting January 1, 2023, businesses must integrate their invoicing systems with ZATCA’s platform for real-time transmission of invoice data.

2. Invoice Format

• XML or PDF/A-3: Invoices must be issued in these formats to ensure they can be processed and transmitted digitally.
• QR Code: Each invoice must include a QR code that links to the digital record stored on ZATCA’s platform.

3. Mandatory Information

• Invoices must include specific details like:
  • VAT registration number of the seller and buyer.
  • Invoice number and date.
  • Total amount and VAT amount.

4. Integration with ZATCA Platform

• Businesses must integrate their invoicing systems with ZATCA’s platform through an API for real-time data sharing, enabling ZATCA to monitor and ensure tax compliance.

5. Data Security

• E-invoices must meet ZATCA’s security standards to ensure the integrity and confidentiality of the transmitted data.
• Businesses are required to retain digital invoices and related documents for at least 5 years.

6. Penalties for Non-Compliance

• Failure to comply with e-invoicing regulations can result in fines, sanctions, or other penalties.

7. Benefits of E-Invoicing

• Efficiency: Automates the invoicing process, reducing manual work and paperwork.
• Tax Compliance: Facilitates accurate VAT reporting and real-time monitoring.
• Security: Reduces the risk of fraud and tax evasion