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In Saudi Arabia, as the e-invoicing evolves, businesses must keep up with the digital invoicing regulations. However, for SME businesses, this shift is especially crucial as it enables smooth operation and meets tax compliances. If you are working in the field of e-invoicing in Riyadh or any other region of the Kingdom, integration in the Fatoorah Portal is a big step towards smooth transactions and compliance with the regulations.
In addition, ZATCA (Zakat, Tax and Customs Authority) implemented the e-invoicing in Saudi Arabia in two phases. It started on December 4, 2021 with the first phase of which businesses were required to generate and store electronic invoices. The second phase, which began January 1, 2023, requires that businesses link their e-Invoice Generation Solution (EGS) to the Fatoorah Portal. In this article, I will take SME businesses in Saudi Arabia through the process of connecting to the Fatoorah Portal in an efficient manner.
Failure to comply with the Phase 2 e-invoicing deadline will mean SME businesses will be penalised. Therefore, businesses should stay updated with ZATCA notifications as they notify businesses six months in advance.
E-invoicing speeds up the process of invoice issuance, makes less paper, and guarantees to get accurate financial records. It is simplified for SME businesses for them to comply with tax, reduces errors and increases transaction transparency; reducing the complexity and uncertainty in business operations.
Resources, tools and guidance for the Saudi government and platforms such as Fatoorah are needed. These benefit SME businesses that want to skip from traditional invoicing to e-invoicing without hassles of technical challenges and they are compliant.
In Phase 2, e-invoicing, businesses need to integrate their e-Invoice Generation Solution (EGS) with ZATCA’s system, which is the Fatoorah Portal. Phase 1 did not require ZATCA integration, but in Phase 2, it is necessary to activate and connect to the exclusive portal. Businesses can generate, renew or cancel Cryptographic Stamp Identifiers (CSIDs) and verify onboarded solutions and devices through the Fatoorah Portal. It makes sure that the transactions are secure and authenticated, so that the businesses can fulfill the regulatory requirements effortlessly.
Is Saudi Arabia e-Invoicing under EGS Onboarding?
In this case, Saudi Arabia’s e-invoicing system refers to the EGS (e-Invoicing Generation Solution) that is an ERP system, Point of Sale (PoS) machine, or Online Cash Register (OCR) that is integrated with ZATCA’s platform. For businesses, it is necessary to have internet connectivity, valid login credentials, a ZATCA compliant e-invoicing solution and APIs for seamless integration to complete onboarding. This allows businesses to produce, store and transmit invoices in line with regulatory requirements.
Following these steps, device registration is done under Saudi Arabia’s e-invoicing system.
1. Go to Fatoorah Portal – fatoora.zatca.gov.sa.
2. Request OTP – Request a One Time Password (OTP) to register an EGS device.
3. If registering multiple devices, specify OTP Quantity – generate separate OTPs for each device.
4. The Fatoorah Portal will display the required OTPs and will also show View OTP Codes.
5. Input OTPs – Input the OTP codes into your devices or EGS units within one hour.
6. Provide the Certificate Signing Request (CSR) after entering the OTPs and submit CSR.
7. Apply for CSID – Use your device to request a Cryptographic Stamp Identifier (CSID).
8. Submit sample invoices for compliance verification to ZATCA.
9. PCSID, which is given upon completion of onboarding, is verified after which you get a PCSID.
Steps 5, 6, and 7 are dependent on APIs. VATCare is a bridge system that simplifies integration between your existing ERP/POS and the Fatoorah Portal. The VATCare APIs enable businesses to register multiple ERP/POS systems in one click and get cryptographic stamps for each device in one click.
Once on boarded, all invoices must be signed digitally by ZATCA to ensure authenticity and integrity. The digital signature contains key invoice details like invoice number, total amount, and time of generation. It prevents tampering and ensures that e-invoices are in accordance with Saudi Arabia’s e-invoicing regulations. An invoice may be considered invalid by authorities or business partners without a valid digital signature.
After submission of an invoice, ZATCA confirms to the businesses. This proves that the invoice has been received and is still awaiting review. The confirmation serves as a proof that the business has met the e-invoicing regulations. This confirmation can be checked by businesses on their Fatoorah portal dashboard, and it prevents businesses from facing problems such as missing or unverified invoices.
The Fatoorah Portal enables businesses to monitor the status of every submitted invoice. Businesses can check whether an invoice has been processed successfully or if there are any issues with it under the E-invoicing Statistics section. Businesses can review the details of an invoice that is flagged with errors and correct any necessary changes before resubmitting it. This is a feature that ensures compliance and avoids delays in financial transactions.
The Fatoorah Portal also allows businesses to track their compliance history apart from tracking invoices. It gives a summary of all submitted documents from the past 12 months with ‘Accepted Documents’, ‘Accepted with Warnings’ and ‘Rejected Documents’. This categorization will help businesses to spot differences, rectify the problem, and keep a record of their invoicing compliance for auditing and reporting purposes.
In order to comply with the regulatory requirements, in addition to the smooth financial flows, businesses have to become compliant with the e-invoicing Phase 2. If businesses understand the framework, follow the right steps, it will help them to smoother transition.
As per Phase 2, businesses have to generate and send the invoices electronically through an approved e-invoicing system. The invoices must be in the format that ZATCA stipulates, including all necessary information such as invoice number, date, total amount and QR code. The system should be able to securely send invoices to customers or clients without violating Saudi Arabia’s invoicing regulations. The use of invoicing solution is a reliable way to avoid penalties and improve operational efficiency.
According to Saudi laws, businesses are obligated to keep all issued and received e-invoices for a legally determined period of time. They must be stored securely and data protection and access for audit and compliance checks. The storage system should serve to easily retrieve invoices whenever needed. E-invoice storage helps businesses achieve proper e-invoice storage, manages the financial records, prepare for tax audits and ensure compliance with ZATCA e-invoicing requirements that can reduce the risk of failing such financial documents.
The rule for e-invoices to become phase 2 compliant is for companies to include certain mandatory fields like VAT registration numbers, detailed details of items in the invoice and what the tax calculations are. The format should follow the approved guidelines of ZATCA in order to make the invoice readable and verifiable. To meet these standards, businesses have to follow the E-invoicing Guideline issued by ZATCA. In case of failure to format invoices properly, the Fatoorah Portal may reject them, which will delay payments and financial transactions.
Businesses can view their e-invoicing compliance over the past 12 months through the Fatoorah Portal’s dedicated statistics page. This section lists the documents as ‘Accepted’, ‘Accepted with Warnings’ or ‘Rejected’ that enables businesses to identify areas for improvement. These statistics are important for internal audits, tax reporting and making sure that there is consistent compliance with Saudi e-invoicing laws. These statistics are monitored regularly by businesses in order for them to be able to swiftly react and mitigate errors and remain in a smooth invoicing process.
In the process of Saudi Arabia’s SME businesses in Saudi Arabia transitioning to e-invoicing in Saudi Arabia, integration with the Fatoorah Portal is essential to ensure compliance and efficiency. Understanding the requirements of Phase 2 will allow businesses to have a seamless, secure and fully compliant invoicing process with ZATCA regulations. Proper e-invoicing onboarding in Riyadh and other regions contributes to penalties avoidance, smoother procedures within the business, as well as more financial transparency.
SME businesses can stay updated with ZATCA guidelines and use platforms such as the Fatoorah Portal to facilitate compliance effortlessly. It is useful for businesses to generate and store invoices correctly, and track the compliance status through the portal as it allows businesses to embrace the digital transformation of all financial transactions.
