Electronic invoicing aims to replace the customary practice of issuing paper invoices with a digital process that allows buyers and sellers to exchange invoices in a structured electronic format through a single operation. E-invoicing also gives the government access to real-time billing information and aids in stopping revenue leaks.
Applicability of the mandate to generate e-Invoices
All natural or legal persons who engage in economic activity and are registered for VAT in the KSA or are required to be registered for VAT in the KSA are required by the e-Invoicing regulations to generate e-Invoices and abide by the e-Invoicing provisions. Therefore, the following taxpayer types would fall within the purview of electronic invoicing:
- A resident of the Kingdom who is a taxable person or company,
- The client or any other party that, in accordance with the VAT Implementing Regulation, issues a tax invoice on behalf of the taxable person and resides in KSA.
For the purposes of the VAT legislation, taxpayers who are not KSA citizens are not required to produce electronic invoices for supplies or sums received that are subject to KSA tax.
The documents covered under the scope of e-Invoicing
All transactions subject to VAT must generate electronic invoices (tax invoices), and the following transactions must generate electronic (debit and credit) notes:
- Cancellation or partial or complete suspension of the supply after its occurrence.
- If there is a material modification or change to the supply that affects the VAT amount,
- Modification of the supply value that the supplier and consumer have previously agreed upon,
- When returning goods or receiving a refund for services.
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