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    More and more countries are staking on digitizing invoice issuance and reception. The latest territory to join this trend is Saudi Arabia. On 4th December, 2020 Saudi Arabia published its initial B2B electronic invoice regulations.

    These first regulations do not detail technical specifications and other relevant information, but they do make clear how the general framework in which electronic invoicing will be developed in Saudi Arabia.

    What is an electronic invoice?

    According to the regulations published, an invoice is electronic when it is issued, stored and modified in an electronic format. Consequently, a paper invoice that is digitized by scanning or copying is not considered an electronic invoice.

    When will the B2B electronic invoice take effect?

    Saudi Arabia’s plan is for mandatory B2B electronic invoicing to take effect one year after the regulation was published, i.e. in December, 2021. During the year, the government will publish specifications so companies can adapt their systems.

    Who will have to adopt it?

    All resident taxpayers must issue e-invoices. Likewise suppliers issuing invoices on behalf of companies domiciled in Saudi Arabia. Within this group, there will be no exceptions either by tax type or by country of destination of the invoice.

    What transmission system should companies use?

    Although there is not yet much detail on this question, what is clear is that transmission systems must meet the following requirements:

    • Internet connection.
    • Compliance with the country’s basic data control and cybersecurity standards.
    • Inclusion of anti-tampering mechanisms.
    • Acceptance of external APIs.

    For businesses and entrepreneurs to have time to adapt their systems, the implementation of the electronic invoice will be carried out in two stages:

    1. Issuing and storing invoices—and debit and credit notes—in a structured electronic format.
    2. Connection with the General Authority of Zakat and Tax – GAZT to transmit the information and data.

    Continuous Transaction Control model (CTC)

    Although the regulations do not detail which electronic invoicing model the country will implement, experts expect them to follow a Continuous Transaction Control (CTC) model, e.g. a clearance model. Most countries that implement mandatory electronic invoicing are tending towards the CTC model because of the benefits it offers regarding fraud reduction. The key to this model is that companies have to transmit the invoices they issue to the tax agency in real time.

    Saudi Arabia thus joins countries like Egypt and Turkey in the use of mandatory B2B electronic invoicing.