Generating QR Code on e-Invoices in Saudi Arabia

Invoicing environment is changing at an incredible speed, and KSA is not left behind as it embarks on implementing e-invoicing system. It was officially deployed in two phases with the first phase deployed on 4th of December 2021 while the second phase was deployed on 1st of January 2023. This massive reform seeks to facilitate and easy flow of funds, compliance with tax laws, and operate efficiency by firms throughout the country. As organizations transition to this reality, one aspect of the e-invoicing system is the addition of QR Code on e-Invoices.

The use of QR codes in e-invoicing is not only a technical evolution, but it is the new revolution in the management of business transactions in Riyadh and the rest of Saudi Arabia. One of the benefits of using QR Code on e-invoicing in Saudi Arabia is in the retrieval of invoice details; it is easy and convenient especially for both the buyer and the seller when it comes to bookkeeping.

The details such as the amount charged on the invoice, date of the transaction and the vendor details can be accessed by the user as soon as they scan the code. This innovation makes invoicing easier and also improves the issue of transparency which is crucial in business today in KSA.

As e-invoicing becomes more widely adopted, it is critical that the electronic environment of organizations is aligned with these new rules. This compliance is made up of the need to create QR Code on e-Invoices. Those organisations that adopt this technology should expect more than just enhancing their billing processes but also enhancing the customer relations through provision of easy-to-use systems. In this blog, we will learn more about why it is crucial to produce QR code on e-invoices in Saudi Arabia and how companies can use this feature to succeed in the current environment.

What is a QR Code?

A QR code is also known as a QR Code on e-Invoices which is a type of matrix barcode in form of black and white squares. It is created for storing data and can be accessed by using a QR code reader or merely with a smartphone camera. In the case of e-invoicing, QR codes bear simple invoice information and are found on both paper and electronic invoices.

In contrast to some of the QR codes, the e-invoice QR code does not lead to a web page; it needs a specific application to be scanned. This makes it possible for the printed invoice to be checked whenever the QR code is presented in text format, which is quite effective in checking the authenticity of invoices.

What is the Use of the Code?

The use of QR codes in e-invoices is mainly to help the client access important information about a given invoice as soon as possible. However, beyond providing a capability for rapid data search, QR Code on e-Invoices have several critical roles in e-invoicing. It supports simple acknowledgement of electronic invoices and credit/debit notes where both partners in a transaction can verify the facts exchanged. This validation is important in ensuring compliance with the regulations provided by the Zakat, Tax, and Customs Authority (ZATCA).

Also, QR codes enable customers to check the authenticity of invoices since fake invoices contain fake QR codes. Users can be confident within the transaction process since the invoice meets the ZATCA requirement through scanning the QR code. This feature is especially helpful in B2C transactions since customers may avoid invoices generated by scammers. The use of QR Code on e-Invoices is a step in right direction in the process of increasing transparency and accountability of all financial activities throughout the Kingdom.

Applicability of the QR Code

QR code application in e-invoicing differs according to the type of the transaction. In case of Business to Consumer (B2C) invoices, the use of the QR code is obligatory and should contain some information on the invoice and the taxpayer. This requirement will guarantee that consumers can easily obtain some basic information on their purchases thus enhancing confidence on the transaction process. Due to the proliferation of QR codes in simple e-invoices, there are no issues with the management of invoice information, and it is easier for customers.

On the other hand, for Business-to-Business (B2B) transactions, use of QR codes was not mandatory for Phase 1 of e-invoicing but has mandatory requirements in Phase 2. When organizations are aligning with these new standards, the e-invoicing solutions used by taxpayers will create QR codes containing such data. When clearing, these codes will be updated in the e-Invoicing Integration Portal so that the printed invoices are conforming with the current regulations. While this integration makes it easier for businesses to issue invoices, it also improves the business’s working.

Information Required in QR Codes

For B2C invoices, there is the requirement of fields that have to be encoded within the QR code to conform to the ZATCA system. The QR code should contain the name of the seller, his or her VAT number, and the timestamp on the invoice, the total amount of the invoice and the VAT amount. Besides, it needs to hold the hash of the XML electronic invoice or credit/debit note, cryptographic stamps created by the solution adopted by the taxpayer. This information makes sure that the QR code encloses all the details about the transaction and at the same time meets the required legal standards.

Likewise, for Phase 2, B2B invoices that contain QR codes have to meet other conditions as well. It is suggested that the QR code should display the seller’s name, the VAT registration number, the time stamp, the total amount and the VAT amount. However, it will also contain cryptographic stamps created by the ZATCA platform, which confirm the invoicing’s authenticity. By requiring these elements to be placed into the QR code the process of e-invoicing increases the level of security and compliance within the Kingdom of Saudi Arabia, thus increasing the level of confidence in business transactions.

How is a QR Code Generated?

QR codes for e-invoices are generated with the help of the e-invoicing solutions applied by suppliers. These specialized software solutions are created to generate QR codes for all kinds of e-invoices with no human interference. Whenever an invoice is created, the information required for e-invoicing is encoded into the QR code for its inclusion in both paper and electronic invoices. Most importantly, it is the suppliers who are expected to create the QR code, as ZATCA does not produce the codes.

This automated process makes it easier for businesses to generate invoices since the QR codes generated meet regulatory requirements. QR code generation must be incorporated into invoicing solutions since it will improve efficiency and accuracy of the solutions, freeing up time for businesses to focus on other activities.

Conclusion:

Concisely, the use of QR codes in e-invoicing is a significant step towards improvement of financial processes in Saudi Arabia. As e-invoicing is being adopted in phases, such regulations have to be complied with to improve transparency by the businesses. Techniques like producing QR codes on the e-invoices will mean that customers can have easy access to the necessary details which will in turn help in validating the invoices easily and faster. This shift not only helps build confidence between buyers and sellers but also helps businesses follow ZATCA rules much more easily.

This is especially the case as the use of e-invoicing starts to advance progressively in Saudi Arabia, where the adoption of QR codes will be crucial. It is important for companies to ensure that they use QR codes well on their e-invoicing in Saudi Arabia to realize on operational efficiency, lesser or no errors and customers satisfaction.

QR Code on e-Invoices is one of the components of the e-invoicing framework which helps in making the process of invoicing easier and at the same time, also plays a major part in compliance with the regulations. By means of this innovation, companies in e-invoicing in Riyadh and throughout the Kingdom can proceed with a greater level of certainty in the changing environment of e-invoicing to create the way to a more effective and transparent environment.