What is e-invoice support? Its most prominent conditions

Innovations in the field of business and trade play a vital role in developing financial systems and facilitating business operations. Electronic invoices are among these innovations that aim to improve efficiency and reduce costs. In this context, the Kingdom of Saudi Arabia seeks to enhance the use of electronic invoices as part of its ambitious vision for digital transformation. Supporting the electronic invoice in the Kingdom comes as a strategic step to achieve a comprehensive digital transformation that enhances transparency and contributes to developing the business environment.

What is electronic invoice support?

In Saudi Arabia, the electronic invoicing system was implemented starting from December 4, 2021, pursuant to the decision issued by the General Authority for Zakat and Income (GAZT) number (M/48) dated 25/12/1442 AH, corresponding to 3/9/2021 AD.

This system requires companies and individuals to issue electronic invoices instead of traditional paper invoices. The aim is to improve efficiency, reduce costs associated with the preparation and processing of invoices, and provide a more sustainable environment that is in line with technological advancements.

The Saudi Council of Ministers has issued a decision stipulating financial support provided by the General Authority for Zakat, Tax, and Customs to small and medium-sized enterprises that are subject to the electronic invoicing regulations, provided that their annual revenue does not exceed three million Saudi Riyals.

What are the requirements for small and medium-sized enterprises (SMEs) to receive financial support?

Having explored the electronic invoicing support system and the procedures outlined by the Saudi Cabinet for supporting electronic invoices, we can identify the primary conditions that SMEs must meet to qualify for financial support. There are two main requirements:

1. Compliance with Electronic Invoicing: As previously mentioned, the enterprise must be subject to the electronic invoicing regulations and system.
2. Annual Revenue Cap: The enterprise’s annual revenue must not exceed three million Saudi Riyals.

In addition to these primary conditions for electronic invoicing support, there are several other requirements that can be categorized as follows:

1. General Terms and Conditions

• The establishment must be Saudi-owned.
• The owner of the establishment must be a Saudi citizen.
• The owner of the establishment must be at least 18 years old.
• The owner of the establishment must have sufficient experience in the field of the establishment’s activity.
• The owner of the establishment must have appropriate academic qualifications for the establishment’s activity.
• The establishment must have a clear and executable business plan.
• The establishment must have a valid commercial registration.
• The establishment must be registered in the social insurance.
• The establishment must be committed to paying all financial obligations.

2. Specific Conditions

a. Support for Electronic Invoicing

• The establishment must be subject to the electronic invoicing regulations.
• The support for electronic invoicing also requires that the establishment’s annual revenue does not exceed three million Saudi Riyals.
• The establishment must be committed to issuing electronic invoices for all its sales.

What is an Electronic Invoicing System (e-Invoice)?

An electronic invoicing system, also known as an “e-invoice,” is a system used to issue and send invoices online instead of using traditional methods such as paper. This system involves converting the processes of preparing and sending invoices into electronic processes that facilitate the electronic exchange of financial data between companies and customers, hence the importance of supporting electronic invoicing.

Electronic invoicing relies on cloud computing technologies and secure encryption to ensure the security of financial information. Companies can easily create, securely store, and send invoices to customers via email or dedicated electronic invoicing platforms.

What are the Benefits of Implementing Electronic Invoicing?

If supporting electronic invoicing is considered a support provided to small and medium-sized companies and establishments, then applying electronic invoicing has several benefits for both individuals and companies. In these points, we explain the most prominent of these benefits:

• Reduces commercial concealment and improves the transparency of commercial operations: As it becomes difficult for parties to manipulate financial information.
• Contributes to combating the underground (black) economy: By documenting all commercial transactions and accurately determining revenues and expenses.
• Helps improve the economic competitive environment: By providing a unified mechanism for documentation and auditing, which achieves a more equitable distribution among companies.
• Provides consumer protection: By providing accurate records of transactions and invoices, ensuring the provision of high-quality products and services.
• Improves the consumer experience: By providing easy-to-access and inspectable electronic invoices.
• Enhances digital interaction between the supplier and the customer: Facilitating communication processes and reducing human error.
• Facilitates compliance with tax obligations: By automatically recording invoices and reports, reducing the chances of errors and delays.

What are the establishments subject to the electronic invoicing regulations?

Regarding the establishments subject to the electronic invoicing regulation, they represent persons who engage in commercial activity within the Kingdom of Saudi Arabia, whether they are (natural or legal), and therefore the Authority provides financial support to these establishments for the purpose of covering the costs of electronic invoicing, in order to avoid any commercial violations associated with the digital transformation of invoices.

What is the difference between a standard tax invoice and a simplified tax invoice?

Standard tax invoices and simplified tax invoices are both types of receipts used in sales transactions, but there are some key differences between them:

1. Purpose:

• Standard tax invoice: Used to record all sales transactions subject to value-added tax (VAT).
• Simplified tax invoice: Used to record sales transactions of a lower value.

2. Content:

• Standard tax invoice: Contains more detailed information, such as the customer’s VAT registration number, the supply date, a detailed description of the goods or services, and the VAT amount separately.
• Simplified tax invoice: Contains basic information, such as the names of the seller and buyer, the invoice date, the total invoice value, and the VAT amount included in the total.

3. Usage:

• Standard tax invoice: Used in all sales transactions subject to VAT, whether between businesses or between businesses and consumers.
• Simplified tax invoice: Used in low-value sales transactions, usually between businesses and consumers.

4. Legal obligations:

• Standard tax invoice: Must be issued by all entities subject to VAT.
• Simplified tax invoice: Entities are allowed to issue it instead of a standard tax invoice for low-value sales transactions.

How can we help you grow your business?

At Al Badr Sales and Inventory Management, we’re committed to your success. Our comprehensive suite of services is designed to boost your sales and elevate your brand. From in-depth market analysis to cutting-edge marketing strategies, we provide the tools and solutions to drive growth.

Whether you’re a small startup or a large enterprise, we’ll help you:

• Build a strong digital presence
• Enhance your social media footprint
• Improve customer experience

We take a personalized approach, tailoring our strategies to your unique business needs and future goals. Our services include:

• Market and competitor analysis
• Targeted marketing strategies
• Sales and service optimization

By leveraging the latest technology and offering customized training, we empower your team to achieve outstanding results.

Financial Support for Electronic Invoices and the Required Conditions for Cloud-Based Software Used to Issue New Electronic Invoices

To qualify for financial support for electronic invoices, your business management software must be a cloud-based program approved by the General Authority of Zakat and Tax (GAZT) and must generate electronic invoices that meet specific criteria. These criteria include:

• Invoice Type: The invoice must clearly indicate whether it is a tax invoice or a simplified invoice.
  • Tax Invoice: This type of invoice requires the customer’s tax number and must include the following information:
    • Invoice type: Tax invoice
    • Business tax number
    • Customer tax number (if applicable)
    • Business address
    • Tax amount
    • QR code at the bottom of the invoice
  • Simplified Invoice: This type of invoice does not require the customer’s tax number, as it is for a typical consumer.

How to Obtain Financial Support:

You can obtain financial support for electronic invoices by requesting the “Badr for Sales” software. This software is one of the best comprehensive sales management programs and is approved by GAZT. After paying the fees, you can submit a support request through the GAZT website to take advantage of the financial support offered to small and medium-sized enterprises.

About Badr for Sales:

Badr for Sales is one of the best accounting and sales software programs used to manage daily sales and purchasing operations. It is a user-friendly accounting, cashier, and inventory management program suitable for small and medium-sized businesses and retail stores.

Al-Badr Daily Sales Program provides you with a remarkable set of features, such as:

• Daily income and expense calculation.
• Calculation of net and gross profits over a specific period.
• Creating invoices for sales and purchases, and controlling the size and format of the invoice.
• Specifically designed to make the process of creating and sending invoices simple and fast.
• The invoice will be ready to send or print with a set of user-friendly tools designed to make your work faster and simpler.
• Complete management of sales, purchases, returns, and inventories.
• Multiple users and permissions for each user.
• Employee management (salaries, advances, bonuses, deductions).
• **Al-Badr Daily Sales Program helps you track and create invoices for sales, purchases, and returns.