E-invoicing and ZATCA
E-invoicing Phase 1 (generation phase)
E-invoicing Phase 1, the generation phase, has applied since 4 December 2021. Invoices must be issued and stored electronically in a structured form, handwritten invoices are not allowed, and simplified invoices carry a QR code. No connection to ZATCA's systems is required.
What it means
Phase 1 is about how an invoice is created, not where it goes. Your system produces the invoice in a structured electronic form and stores it. A handwritten invoice book is out, and invoices must be in Arabic, with a second language allowed as an addition. Nothing is sent to ZATCA at this stage. If you already issue your invoices from software that stores them, you are working in the spirit of this phase already.
On a simplified invoice, the QR code holds five items: the seller name, the VAT registration number, the timestamp, the invoice total with VAT, and the VAT amount. Anyone with a phone can scan it and compare the figures with the printed invoice. That is why the code should be generated from the real invoice data and never typed in by hand. Any difference between the code and the printed figures points to a fault in how the invoice was issued and is worth checking.
A cafe on Phase 1 prints a simplified invoice with a QR code at every sale and keeps each invoice in its software. If the business is later chosen for Phase 2, those habits carry over, and the new work is the connection to ZATCA. At this stage the cafe needs no certificate or one-time password, since those all belong to the Phase 2 steps.
In practice
- Issue every invoice from your system and retire the handwritten invoice book.
- Check that simplified invoices show a QR code with the five required items.
- Make sure invoices are in Arabic, adding a second language only if you wish.
- Confirm each issued invoice is stored electronically in your system.
Questions about E-invoicing Phase 1 (generation phase)
Does Phase 1 mean sending invoices to ZATCA?
No. Phase 1, the generation phase, needs no connection to ZATCA's systems. You issue and store invoices electronically in a structured form and put a QR code on simplified invoices. Sending invoice data to ZATCA belongs to Phase 2, the integration phase, which reaches businesses in waves.
What changes for a small shop that still uses a handwritten invoice book?
The shop must stop handwritten invoices and issue them from a system that stores them electronically in a structured form. For sales to consumers that means simplified tax invoices with a QR code. A cloud invoicing system or a point of sale can do this without any connection to ZATCA.
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