Enriching XML Data for ZATCA Connectivity

Digital adoption is gaining momentum, thus the enrichment of XML data has become an important aspect of facilitating compliance with the ZATCA in the e-invoicing structure of Saudi Arabia. The adoption of E-invoicing in Saudi Arabia has brought behavioural change in the business where businesses are now supposed to submit structured invoice which conforms to the stringent digital formats prescribed by the Zakat, Tax and Customs Authority (ZATCA). This shift is especially consequential in big business hubs like E-invoicing in Riyadh where both titan corporations and small and medium enterprises are harmonizing their systems with new regulatory expectations for on-demand reporting accuracy.

ZATCA has implemented Phase II of its e-invoicing mandate which will be effective from 1 January 2023 for registered taxpayers above 300 billion SAR ( 2021) to connect its ERP or accounting system into the official Fatoora platform. One of the basic requirements of this connection is the ability to produce and send invoices in XML format. This is where enriching XML data is so important; it turns a raw invoice into a ZATCA compliant document filled with mandatory fields, unique identifiers, timestamps, digital signatures and VAT details, which can be both read and verified by ZATCA’s systems.

What is XML?

XML, or Extensible Markup Language, is a loose standard of representing structured data in a human and machine readable format. It is a very important role in E-invoicing in Saudi Arabia particularly under ZATCA guidelines by bringing invoice data to a standardized structure. Such a formatting structure is necessary in enriching XML data and compliance with the regulations.

ZATCA e-invoicing system is dependent on XML based standards to establish the way electronic invoices should be designed and exchanged. The use of XML for information transfer allows enterprises to safely communicate data in both internal networks and on the internet. Adding extra content to XML data contained in these files allows including all required fields such as VAT numbers, timestamps, and digital signatures – so that every invoice delivered meets the technical and legal requirements.

What is Data Enrichment?

Data enrichment refers to the process of making existing information better by providing missing or incomplete information and/or some additional information to make the data more complete, accurate and compelling. In the process of enriching the XML data, this translates into up-to-date update on the e-invoice files with all the necessary information components, like tax details and digital signatures to align the data with the ZATCA requirements and guaranteeing smooth compliance in e-invoicing in Saudi Arabia.

Role of XML Data Enrichment in SA e-Invoicing

In the Second Phase of e-invoicing, every company has to use an E-Invoice Generation Solution (EGS) where they generate XML format for ZATCA submissions. Prior to transmission, the EGS needs to enrich XML information through vital fields such as invoice type, timestamps, and UUID’s. By taking this step invoices are structured appropriately and ready for validation through the ZATCA portal.

After the XML file is enriched and uploaded, the ZATCA validates it and returns it for business use. This stage, therefore, requires enriching XML data because incomplete files may cause rejection or noncompliance. By imprinting necessary metadata including cryptographic stamps and VAT-related details, enterprises comply with ZATCA’s technical norms, and have smooth e-invoicing workflows.

Universal Unique Identifier (UUID)

• The UUID is a global unique number for every invoice simply for it to be traced throughout its journey (storage, audits and reconciliations, etc.).
• This unique taxpayer Identifier is automatically generated by the taxpayer’s E –invoicing solution (EGS), thus no duplication of invoice IDs.

Previous Invoice Hash (PIH)

• The PIH is a system generated crypto signature of the invoice which uniquely identifies a digital signature. Changes on the invoice will change the hash.
• This old invoice hash is transferred to the next invoice in order to keep a tidy order of invoices.
• Incorrect e-invoice generated at least remains part of the records, and hash value is incorporated into the next valid version as continuity is maintained.

Invoice Counter Value (ICV)

• The invoice counter is an automatic component of e-invoicing system that tends to increase each time an invoice is created.
• Whenever an invoice is raised the counter value grows in increments.
• The same invoice counter value may be found in different units of EGS belonging to one taxpayer but will never re occur in one unit of EGS.
• ICV and invoice sequence number (IRN) are not the same. It identifies with each EGS unit and can contain multiple sequence numbers for any particular VAT, based on the number of configured EGS units.

Conclusion:

Finally, enriching XML data is a key aspect of ensuring that your invoices are 100% compliant with ZATCA’s e-invoicing regulations, in Saudi Arabia. By using such aspects as the Universal Unique Identifier (UUID) Previous Invoice Hash (PIH), and Invoice Counter Value (ICV) companies can ensure that their invoices are validated and traceable. By doing so, not only the accuracy of the e-invoicing system is enhanced, but also the possibility of smooth ZATCA integration is created and the businesses can be sure that all legal and technical requirements are met.

As Saudi Arabia increases its e-invoicing system, enriching XML data is still a major ingredient of success. If you get your technical data done correctly and before submission, any likely rejection or errors are eliminated. With this forward thinking, compliance is maintained and an environment where issuing of invoice is made secure and open is facilitated. As businesses gravitate to more digital options, using these essential data points within the XML structure is highly relevant in the long term for efficiency in operations.