Saudi Arabia’s tax authority, the ZAKAT, Customs and Tax Authority (ZATCA), has announced a two-phase introduction of e-invoicing – converting the process of issuing and processing invoices and credcit and debit notes into an electronic process. All Saudi businesses must be able to generate e-invoices by 4 December 2021. Businesses are required to integrate their systems – in a staggered process – with ZATCA on or after 1 January 2023. As a professional services firm, Keypoint is uniquely qualified to support Saudi businesses with the challenge of both e-invoicing phases.
What do businesses have to do to comply with phase 1 – generation?
On the face of it, complying with phase 1 – generation – requirements demands a focus on automating a process that may – for many businesses – already be automated. However, there are still businesses in Saudi Arabia that are manually producing invoices – or scanning paper-based invoices to email them to customers. ZATCA has clarified that, after 4 December 2021, non-compliant tax invoices will open businesses to penalties – and mean that input tax cannot be reclaimed, making VAT a direct cost to businesses. Beyond that, a system that produces e-invoices that are compliant from a systems perspective but incorrect from a taxation perspective is producing non-compliant invoices – and that opens your business up to ZATCA audits, assessments and penalties.
What do businesses have to do to comply with phase 2 – integration?
On or after 1 January 2023, businesses in Saudi Arabia have to integrate their invoicing systems with ZATCA to clear e-invoices and – on the purchase side – to validate incoming invoices. Phase 2 requires electronic solutions – and the integration of those electronic solutions with ZATCA’s systems. This has significant consequences – full audit trails can be done across a business’ entire supply chain. While many key decision-makers may be relatively confident about phase 1, it is clear to most observers that integration with ZATCA’s systems is something that will need to be done with care.
How can Keypoint help?
As a fully integrated professional services firm, we operate seamlessly across borders and across areas of expertise. Our IT consulting teams work with our in-house VAT experts to ensure not only that systems are stable and secure but that the data they are processing is accurate and complete. Once that is done, we can offer a range of consultancy options and implementation models:
- Where in-house teams implement an e-invoicing solution (generally based on an impact assessment report and a business requirements document), our IT consulting and VAT teams document a post-implementation report which analyses alignment with ZATCA requirements (both phase 1 and 2) and recommends upgrades (as appropriate)
- Where businesses engage an external provider to implement an e-invoicing solution, our IT consulting and VAT teams can analyse alignment with ZATCA requirements (both phase 1 and 2) and recommend system upgrades (as appropriate)
- Based on our analysis, businesses may decide a bolt-on engine is the most appropriate way to comply with ZATCA’s generation and integration requirements. Keypoint offers a number of different, tailored e-invoicing solutions.
- Based on our analysis, businesses may decide that the optimal way to deal with e-invoicing is to outsource the process completely. Keypoint offers a range of on-premises and cloud-based e-invoicing solutions that can be tailored to different sectors, company types, and complexities.
For more information on our e-invoicing services, please download our solution implementation flyer or contact us.