In Saudi Arabia, e-invoicing requirements are mandated by the Zakat, Tax, and Customs Authority (ZATCA) to enhance VAT compliance, reduce fraud, and streamline the invoicing process. Below are the key e-invoicing requirements for businesses:

1. Mandatory E-Invoicing

• Phase 1 (Generation Phase): Since December 4, 2021, all VAT-registered businesses must generate and issue invoices electronically in XML or PDF/A-3 format.
• Phase 2 (Integration Phase): Starting January 1, 2023, businesses must integrate their invoicing systems with ZATCA’s platform for real-time sharing of invoice data, enabling ZATCA to monitor and verify compliance.

2. Invoice Format

• Invoices must be issued in XML or PDF/A-3 format to ensure they can be processed and transmitted digitally.
• Each invoice must include a QR code that links to the digital record of the invoice stored in ZATCA's system.

3. Mandatory Information on Invoices

• VAT registration numbers of both the seller and buyer.
• Invoice number and date.
• Total amount and VAT amount.
• A QR code linking to the digital invoice record in ZATCA’s system.

4. Real-Time Data Sharing

• Businesses must ensure that their invoicing systems are integrated with ZATCA’s platform, allowing for real-time transmission of invoice data to ZATCA for compliance monitoring.

5. Security & Data Integrity

• E-invoices must adhere to ZATCA’s security standards to ensure that invoice data is transmitted and stored securely.
• Businesses must retain digital invoices and related records for a minimum of 5 years.

6. Penalties for Non-Compliance

• Failure to comply with the e-invoicing regulations can result in penalties, including fines or other legal actions.

7. Benefits of E-Invoicing

• Efficiency: Reduces paperwork and manual processes.
• Tax Compliance: Real-time data sharing helps improve VAT reporting accuracy.
• Security: Reduces the risk of tax fraud and evasion.