In the era of increasing use of technology and the transition to the digital world, the form of the electronic invoice has become a reality that cannot be ignored in many sectors and countries, and in the Kingdom of Saudi Arabia, the electronic invoice system is witnessing an amazing development. To comply with local laws and regulations and with the digital transformation strategy adopted by the Kingdom, adopting electronic invoices is one of the basic pillars of developing the digital economy and achieving transparency and efficiency in commercial operations. For this reason, we have prepared this article for you that takes you on an exciting journey to explore the form of electronic invoices and how to ensure their compliance with the laws in the Kingdom of Saudi Arabia. So get ready to discover new ways to improve your business operations and achieve significant savings in time and effort.
What is the definition of an electronic invoice?
The definition of the format of the electronic invoice is that it is an electronic document issued and stored using an electronic system that complies with the requirements of the relevant tax authority, whether it is in the Kingdom of Saudi Arabia, Egypt, the Emirates, etc., and other countries. The electronic invoice is a digital alternative to the traditional invoice printed on paper. It has the same legal force and credibility.
Why is the electronic tax invoice submitted in the Kingdom of Saudi Arabia?
Saudi Arabia offers electronic tax invoices with the aim of moving to an effective digital environment and achieving many advantages, which are as follows:
Facilitating financial transactions
The electronic invoice format simplifies and facilitates billing and tax collection processes. Instead of relying on traditional paper invoices, businesses can issue and exchange electronic invoices quickly and easily over the Internet. Therefore, this contributes to improving the efficiency of financial operations and reducing potential human errors.
Create a shared database.
The electronic tax invoice system creates a central, shared database that includes all corporate tax invoices. Thus, this allows government agencies and financial auditors to review accounts and verify the validity of financial operations more accurately and reliably, and it also facilitates the detection of any fraudulent activities or data manipulation more quickly.
Speed up audits.
Thanks to electronic tax invoices, tax audits and reviews can be accelerated, as auditors can access electronic invoices and related data easily. Thus, they have a greater ability to analyze information and detect any tax violations faster and more effectively.
Track transactions in real time.
The electronic tax invoice form provides the ability to track financial transactions in real time, as companies, auditors, and government agencies can monitor financial flows and analyze data immediately. Which contributes to making quick and informed economic decisions.
Types of electronic invoices
There are two types of them:
Tax invoice
The tax invoice can be defined as the invoice that is called B2B, that is, sent between one business and another, and it must contain the following elements:
- Buyer’s private information, starting with: name, address.
- The invoice number itself.
- The name and address of the facility.
- the price.
- Tax facility number.
- Description of the services or products provided.
- Quantity description.
- the date.
Simplified tax invoice
The simplified tax invoice can be defined as that invoice called B2C, which is sent from a business to a customer, and it must comply with the terms and elements of the simplified tax invoice in the Kingdom of Saudi Arabia.
Things to consider in electronic invoice format
The electronic invoice includes a set of main points that must be taken into account in accordance with the conditions and controls determined by the tax system in each country. Among the main points that can be mentioned are:
Necessary data
The electronic invoice must include specific and necessary information, such as the name and address of the supplier and beneficiary, in addition to details of the goods or services provided, including quantity, price, and applicable taxes.
Digital signature
The electronic invoice form must contain a digital signature that proves the authenticity of the document, as the digital signature is used to verify that the invoice has not been subjected to any tampering or unauthorized change.
Compliance with tax laws
An electronic invoice must comply with applicable tax laws and regulations in the relevant country, including compliance with technical and regulatory standards specified for electronic invoicing.
Retention and storage
The electronic invoice must be stored for a specific period of time in accordance with tax requirements. It is worth noting that it can be stored in electronic or paper form according to applicable laws.
Electronic invoice format in the Kingdom of Saudi Arabia
The electronic invoice system has been implemented in the Kingdom of Saudi Arabia in several stages, and a specific date has been set for the implementation of each stage of this system, which can be summarized as follows:
Release phase
The issuance phase began on December 4, 2021 AD. At this stage, establishments must issue electronic invoices instead of traditional paper invoices. It is worth noting that electronic invoices must be consistent with specific legal and tax requirements.
The form of the electronic invoice at the issuance stage
The electronic invoice form at this stage includes the following information:
- The name and address of the facility.
- The establishment’s tax ID number.
- Invoice issuance date.
- invoice number.
- Description of the goods or service provided.
- Quantity and unit.
- Price per unit.
- Applicable tax (if there is a tax applicable).
- Total amount.
Linking stage
The linking phase began on January 1, 2023, AD. At this stage, establishments must link their accounting system and electronic invoicing system to the system of the General Authority of Zakat, Tax, and Customs. It is worth noting that this requires technical integration that ensures a smooth and accurate flow of information between the different systems.
The form of the electronic invoice at the linking stage
The main important points in the form of the electronic invoice at this stage are:
- The electronic invoice must contain the required barcode to identify the invoice effectively.
- It must also contain the necessary data to correctly record the business process in the system.
How to design an electronic invoice that is compatible with the conditions of the Zakat, Tax, and Customs Authority using the Qoyod program
When designing an electronic invoice compatible with the conditions of the Zakat, Tax, and Customs Authority through the Qoyod accounting website, the following steps must be followed carefully:
- Invoice type: You must first determine the type of invoice required, whether it is a tax invoice or a simplified tax invoice.
- Log in via the website: You can then log in to the Qoyod system.
- Create the invoice: After selecting the invoice type, you must go to the sales list, click on sales invoices, and you will be redirected to a new page.
- Entering information: On the new page, you must enter all the necessary information on the invoice.
- This information includes customer details, details of products or services sold, prices, and any applicable taxes or duties.
- Save and send the invoice: After entering all the required information, you must save and send the invoice.
- You can take advantage of the invoice saving function for reference at any later time, and then the relevant authority will review the invoice before officially accepting it.
- Follow the invoice status: Through the sales list, you can follow the details of all previous invoices.
- Check the status of invoices to see if they have been paid, late, or if the invoice has not yet been paid.
Conclusion
We clearly see that the form of electronic invoice compliant with the laws in the Kingdom of Saudi Arabia represents a revolutionary shift in the world of business and trade. It is not just an electronic document that replaces the traditional invoice, but rather an effective and secure tool that enhances transparency and contributes to improving the efficiency of business operations. By adopting the electronic invoice, companies and individuals can achieve many advantages, starting with reducing costs and the time taken to issue traditional invoices. In order to eliminate the risks related to loss and forgery of invoices, do not forget that it is also an effective tool for financial and accounting reports, as data can be tracked and analyzed easily and accurately. In addition, the electronic invoice acts as a decisive step in the Kingdom’s development towards the digital economy, as it enhances digital transformation, It supports innovation and economic development and provides a more sustainable environment as waste generation and the use of paper resources are reduced.
With the growing trend towards digitization and technology in Saudi Arabia and around the world, estimating the electronic invoice with the Qoyod program represents a clear civilized step towards the future. The program also offers all its customers: point-of-sale systems, stores, customers, etc., at prices that suit everyone. Therefore, it is considered the best accounting program among all other accounting programs.
After learning what the electronic invoice format is that is compatible with the laws in the Kingdom of Saudi Arabia, try Qoyod now for free for 14 days and enjoy exporting the invoice as you would like to see it, in compliance with the terms of the Zakat, Tax, and Customs Authority. To achieve success in the modern world of management.
