electronic invoice:-

What is an electronic invoice?

Postal schedules and different systems for the person claiming to pay (the payer or the payer) via e-mail or an electronic portal, including the same elements as the current tax mantra with the addition of the buyer’s VAT registration number

Who are subject to the electronic invoice system?

Tax invoices subject to the value-added law.

It includes everyone who issues tax invoices, and simplified tax invoices, according to the value-added tax system. It includes the following transactions:

1/ Exporting services or goods from the Kingdom of Saudi Arabia to other countries.

2/ Supplies of services and goods subject to the tax law in accordance with the terms and conditions of the Kingdom.

All payments received to taxable persons in connection with the supply of goods and services prior to the occurrence of the supply.

3/ All supplies assumed by taxable persons.

4/ All persons authorized to issue tax invoices on behalf of a person subject to the VAT Law

What are the effective dates of the electronic invoice (invoice)?

– The first stage (issuance stage) will require taxpayers to issue and keep compatible invoices and tax notices through an electronic system compatible with the Authority’s systems.

– The first stage will come into force on December 4, 2021 AD for persons subject to the electronic invoice regulation.

What are the requirements for each stage?

1/ Stop issuing invoices by hand

2/ Add a QR code on the invoice

3/Add the VAT registration number of the buyer, if registered for VAT

4/ Issuing the invoice in A_3XMl,PDF(f, ) format

5 / Connection and integration with the Authority’s systems

6/. Tamper-preventing properties.

All persons subject to the electronic billing regulation must use electronic billing systems compatible with the authority’s systems to issue invoices starting from December 4, 2021. Manual invoices will not be considered as tax invoices that are compatible with the Authority’s systems.

Is electronic invoice mandatory?

The electronic invoice is mandatory for all persons subject to VAT and any other parties that issue tax invoices on behalf of suppliers subject to VAT.

Exceptions are made to non-resident and taxable persons.

Is there any impact on the process of submitting tax returns after applying the electronic invoice?

No, there is no effect or change on the tax return filing process

After issuing the electronic invoice and sharing it with the customer, is it possible to amend or

cancel it if there is an error in it?

The invoice cannot be canceled after it has been issued, amended or deleted, but, according to the provisions of the implementing regulations of the value-added tax system, a credit or debit note must be issued for any amendment to the tax invoice or the simplified tax invoice. Accordingly, the supplier must issue an electronic notice related to the amended invoice

What are electronic billing systems?

They are specialized computer systems that assist in the creation and delivery of electronic invoices. An invoice in an electronic invoicing system often goes through the following steps:

• Collect customer billing data in the billing system
• Create customer invoices by billing system
• Pass the invoice to the electronic billing system
• Collect invoices and send them to customers online
• The customer receives a notification of a new invoice

Electronic Invoice Features:-

1- Assisting financiers in verifying the validity of billing data for the dealing parties before issuing them

2- Strengthening their tax positions by classifying them among the companies with low tax risks,

3- Facilitate the procedures for settlements between companies in relation to value added tax

4- Updating the method of exchanging invoices between companies

5- Reducing the administrative burden

6- Reducing transaction costs

7- Gradually dispensing with paper-based archiving of invoices,

8- Simplifying the procedures for examining companies with the possibility of “remote examination”,

9- Facilitating the “tax refund” procedures, the process of preparing and submitting returns,

10- Ending the traditional procedures with companies to complete the bills

Other advantages:-

1- Fast and safe

By using e-invoice, you can eliminate many manual processes such as bill printing, postal dispatch and warehousing. The adoption of e-invoicing allows for fast and efficient data transfer and billing and reduces the time it takes for the billing process to reach the payer and wait for his response with you.

2-Easy to organize and manage invoices

Relying on traditional methods and using account books is not easy and increases the possibility of damage or loss of some invoices, especially once the payment process is completed. But fortunately, once you rely on electronic invoicing you will be able to keep all your invoices in one place and you will have the option to go back and access all the payment and payment data for your trade and search will be faster and easier when needed.

3- Ease of objection or modification of invoices

If your customer needs or needs to change some invoices before making a payment, whether data related to the basic data such as the name or address of the invoice recipient, the paying party, the amount to be paid, details of the items and services requested, or objecting to an invoice received in error, you can submit a request for review and modification easily Without the need to contact or visit the bill issuer.

4- Reducing the transactions of the underground economy

The hidden economy is defined as an economy that is not subject to the control or management of the government in which the service is provided, as it includes hiding the outputs and inputs from the eyes of the state and covering up commercial and buying and selling operations and may result in evasion of imposed international entitlements. Whereas, reducing the hidden economy was the main goal of the Zakat and Income Authority’s implementation of the electronic billing law.

5- An eco-friendly option

By limiting or reducing the use of papers or envelopes to send invoices and checks on a daily basis, as reducing their use and replacing them with electronic processes and keeping them in a digital system instead of using additional papers and files to save and collect invoices contributes greatly to preserving the environment.

Disadvantages of using the electronic bill:-

– Moving to an electronic invoicing system is a big change for both your store employees and your customers. You will need to train your employees on how to use the electronic billing system and it may take some time until they get used to using the system efficiently. On the customer side, moving to electronic billing can be a concern and you will need to use certain methods to encourage your customers to adopt this system when dealing with your business.

1- Internet connection problems

You cannot guarantee that the internet connection will be fast and smooth every day you open your store doors and do sales and issue electronic invoices, and the occurrence of problems in the internet will hinder the billing processes and may result in some customers getting angry when they are late in completing the sales.

2- Customers’ concerns about information privacy issues

There is a good chance that the reason your customers refuse to use electronic billing is because of information security and privacy concerns, as statements and invoices contain sensitive personal information and they may feel safer when they can receive and store it manually. Be sure to explain to your customers how secure your online payment system is and how they can ensure their privacy when they receive invoices (eg deleting invoice messages once they have been read or printed and making sure they have a hard-to-guess password for their email).