ZATCA E-Invoicing Solution

ZATCA E-Invoicing Plugin – A Must Read About Saudi E-Invoice

ZATCA E-Invoicing Plugin is the only way to get your invoice digitalized into its e-invoicing format. ZATCA, also known as the Zakat, Tax and Customs Authority, has imposed a new invoicing resolution on the Saudi taxpayers – effective as of 4th December 2021. This new law will become a milestone for the businesses in Saudi in terms of dealing with tax avoidance, money laundering, unauthorized businesses stepping into the industry, and many more. That’s why some of the information regarding tax submission is important. For that, you need ZATCA e-invoicing QR code, which requires sophisticated plugin to get generated.

This new resolution will cause the permanent banning of paper-based or handwritten invoices and bring the e-invoices into the limelight for the perfect implementation. It will also bring all the taxpayers or taxpaying companies under one canopy in the later stage. For that, the Saudis need to have the perfect e-invoicing implementation system, such as the ZATCA E-Invoicing plugin. We will take extensively about one of our best and ZATKA compatible plugins called Challan a bit later. We will discuss it as we go along the line by line.

What Is ZATCA E-Invoicing?

Saudi Arabia’s law on the invoice is changing from the 4th of December, 2021 – meaning the country has recently announced a new motion stating that it will impose a properly structured invoice format in its electric form on all the taxpayers. All the taxpayers refer to those who are the residents of the Kingdom of Saudi Arabia and VAT registered, as well as those who will represent on behalf of the suppliers.

It means any sellers or suppliers or the part of the supplying process will be involved in generating the electronic invoice in Saudi Arabia as long as they are subjective to VAT. Besides, the invoice must be generated by the properly compliant electric system or solutions as per the e-invoicing requirements by ZATCA.

The invoices falling under the criteria of ZATCA are the tax invoices (for B2B), simplified tax invoices (for B2C), and credit/debit notes.  

It is divided into two stages; the first stage is getting effective as of the 4th of December, whereas the second one will be effective from the 1st January, 2023. The emergence of these new electric invoices will lead to the extinction of the previously used obsolete form of handwritten invoices and exclusion of other forms of paper-based invoices or invoices that are converted forcefully into the electric form using various editing or conversion tools.

NB: The non-residents are exempted from this upcoming ZATCA E-Invoicing rule meaning that they will no longer be subjective to generate or store the invoice in the electric form.

E-Invoicing Requirements of ZATCA

As stated earlier, ZATCA has two phases, which have their own separate dates to take effect. The two phases differ from each other and have their own unique requirements. Some are mandatory in the first stage, whereas some are compulsory in the second stage. Again, some requirements are in common between the two stages. However, the first phase is slightly milder in terms of the strictness of the law, whereas the second one expects all the taxpayers to follow the hard and fast regulations. Let’s take a look at how the ZATCA defines them;

First Phase of ZATCA E-Invoicing:

  • It is also known as Generation Phase
  • All the taxpayers who are eligible for VAT or VAT registered have their invoices generated in E-Invoices
  • This phase will take place from the 4th of December, 2021
  • The invoice must be generated as a compliant electric solution or ZATCA e-invoicing solution provider
  • Not only the invoices but also anything related to the invoices like credit notes or notes should come out as its electric form by the ZATCA e-invoicing plugin
  • The subjective taxpayers must create and store the tax invoices using the complaint tax system
  • The subjective people should always archive their e-invoices
  • For the simplified tax invoices for B2C, generating the ZATCA e-invoicing QR code is absolutely compulsory
  • Having a title for the invoice is a must, and mandatory for B2B simplified tax invoices
  • For the tax invoices like B2B, generating the QR code is optional; however, you must have the title mentioned in the invoice
  • There are a few mandatory fields, which the tax authority must define and explain
  • These fields must go by in accord with the business and validation rules
  • By scanning the QR code, the following fields must show up; seller’s name, VAT registration number of the seller, timestamp of the electric invoice or credit/debit note (date and time), VAT total, electronic invoice or credit/debit note total (with VAT)

Additional Requirements of First Phase

  • If the buyer has VAT registration number, then they should mention their VAT number in the e-invoices
  • For phase 1, there are no stern requirements of approving your invoices once the system generates them before reaching out to the end-person/customers
  • Your e-invoices can be either PDF or XML or PDF with XML embedded but no XML (machine-readable format is obligatory)
  • At the first stage, there is no requirement for your electric system to be certified by ZATCA
  • You don’t have to integrate with either ZATCA or ZATCA’s e-invoice portal in this phase
  • Your compliant ZATCA e-invoicing solution provider or ZATCA e-invoicing plugin must be compatible with internet connection in both stages
  • The compliant electric solutions or providers or plugins must not authorize some of the forbidden functionalities in phase 1, such as time alteration in the software system, insufficient user administration (unauthorized access), sabotaging or tampering invoices, and other pertinent notes, etc.
  • Poor sequence maintaining of the invoices (same invoice generation with multiple random numbers)
  • The electric solution must be able to timestamp the invoices to prevent any modification or illegal access to the software (timestamp locates the encoded characters in the software to prevent unidentified logging)

Second Phase of ZATCA E-Invoicing:

  • It will be enforceable from the 1st January 2023
  • This phase demands integration of the taxpayers or different groups of companies with the ZATCA e-invoicing portal
  • To integrate with the phase 2 wave of ZATCA in Saudi Arabia, all the taxpayers will be notified of their joining 6 months in advance
  • Taxpayers must generate the e-invoice using the compliant electric system like ZATCA e-invoicing solution provider
  • E-invoices must be in XML format
  • All the issued and generated e-invoices must be submitted into the e-invoice portal within 24 hours
  • For B2B tax invoices, generating QR code by the ZATCA e-invoicing plugin is absolutely compulsory
  • Inclusion of the VAT number in the e-invoice if the taxpayer is has VAT registration number
  • To consolidate more security in the invoice, taxpayers must apply specific-security anti-tampering add-ons, such as cryptographic stamp (e-signature), UUID, and hash
  • There are a quite few technical and business requirements available on the ZATCA website, which the subjective individuals must adhere to

Why Do You Need to Approach to ZATCA E-Invoice Solution Provider?

ZATCA doesn’t endorse any plugins for generating the e-invoices themselves. Suppose you are in dire need of an E-Invoicing solution provider in Saudi Arabia. In that case, they need to search for the right solution providers or the in-house technical experts or developers like ECR vendors, Software vendors, etc.). It is also imperative to approach them should you need to upgrade from the mundane system to a top-class e-invoice generating plugin or purchase a new compliant electric system to generate the most up-to-date PDF e-invoices.

Also, in the midst of implementing the two phases, you may encounter some of the business and technical-related issues. It will not always be possible for you as a taxpayer or your developer to acknowledge every problem as the process is robust. Primarily, it can be pretty daunting when you have to deal with phase 2 invoice generation as there are more requirements than phase 1. In that case, the developers should visit the ZATCA page to know more about the business, technical and security requirements.

What Are the Benefits of Electronic Invoices in Saudi Arabia?

  • Minimize the wrongful or illegal, or concealed transactions
  • Adhere to the lawfully imposed tax declaration system to prevent any tax avoidance
  • Establish a benchmark for the strict verification process of any business for the tax purpose
  • Revitalize the customer-sellers relationship through a proper digitalization of the Saudi E-invoice system
  • Roll out more requirements to enhance the transparency of the businesses for better tracking and data retention
  • Enrich the tax authority’s experience in auditing and validating the proper tax e-invoices by unifying the entire business ecosystem

Challan: A Perfect ZATCA E-Invoicing WordPress Plugin

Since the process is just about to launch, it is impossible for all the WooCommerce invoice plugins to generate the exact electric invoices per the E-Invoicing requirements nationwide in Saudi. But we are not that gullible not to have thought about it; we had started to work on these issues and bolstered our already-popular Challan plugin to become incorporated as the E-Invoice solution provider in Saudi Arabia.  And a part of Challan’s new addable feature, which generates QR codes, has finally become available in the e-invoices. Anyone from anywhere can scan the ZATCA E-Invoicing QR code generated by the Challan to see the details like VAT registration number, debit/credit note total, seller’s name, and total VAT.

ZATKA doesn’t create any QR code apart from imposing the guidelines. Therefore, only the Challan can give you the most sophisticated e-invoices option. Check out the following image once scanned from the QR code generated by the Challan plugin;

Challan QR Code Scan Result - ZATCA E-Invoicing Solution Provider

Check out its other features.

Features

  • Create Woo PDF invoices along with packing slips, shipping labels
  • Attach the invoices to the email as per the change of the order configuration
  • Show all kinds of amounts, including the in-depth net amount, shipping cost with or without tax, total tax amount, etc.
  • 17+ paid stamps, 6 aesthetic templates, unlimited uploading option of stamps and logos are in one plugin
  • Any static file like policy guidelines, refunded guidelines can be easily uploaded
  • Customize your font within the invoice as per your requirement
  • Generate sequential invoice numbers for perfect and unique invoices
  • Bulk downloading options for invoices, packing slips, and shipping labels
  • Check out your implemented logo or template in the preview section
  • Super user-friendly interface
  • Supports all kinds of multi-lingual, multi-currency plugins
  • Supports the plugins for coupon, discounts, and subscription
  • Customize the paper size from A3, A4 to any size
  • Credit note generation for refunded or partial refunded order
  • Watermark and background image option for more security
  • Generates QR and Barcode
  • Compatible with Zakat, Tax and Customs authority (ZATCA) to generate ZATCA e-invoicing QR code

To know more about Challan’s feature, read the blog on the best WooCommerce invoice generator.

Final Words

To stay updated about this new Saudi E-invoice, aka ZATCA e-invoicing, it is crucial that you must exercise due diligence for its viability and test it as much as you can thoroughly so that you won’t face any issues when the system takes place. Also, you must inform all of your staff to constantly take the updates of the E-invoicing solutions in Saudi Arabia. Also, Challan provides the best electric invoice experiences to the taxpayers in terms of transparency and tax avoidance. If you have any further queries about the Challan plugin or ZATCA e-invoicing solution provider, please comment below.

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