Over the past few years, Saudi Arabia has made substantial efforts to modernize its tax administration and simplify business processes. A notable example is the introduction of ZATCA (Zakat, Tax, and Customs Authority) e-invoicing. This progressive system requires businesses to create electronic invoices and promptly submit them to the tax authority in real-time.
In this article, we will delve into how Odoo, a widely used ERP software, can streamline ZATCA e-invoicing processes and guarantee compliance for businesses operating in Saudi Arabia.
What Makes ZATCA Essential?
The primary objective of this transition is to align business data with the ZATCA system to facilitate smoother and more transparent trade. By standardizing the reporting of invoices in a uniform, machine-readable format, the government can effectively monitor transactions submitted to their portal. This move aims to eliminate paper storage and handwritten invoices, transitioning to a system where all invoices are authenticated on the ZATCA portal. Consequently, fraudulent activities like fake invoices can be swiftly identified.
E-invoicing will establish a unified database for audits. This easily accessible data will reduce the frequency of tax audits conducted by authorities.
E-invoicing Regulations in Saudi Arabia
The e-invoicing regulations will encompass all taxable goods and services subject to VAT.
E-invoicing is compulsory for all transactions involving business-to-business (B2B), business-to-government (B2G), and business-to-consumer (B2C). When issuing an e-invoice to a buyer, it is necessary to also provide a printed copy.
The invoices must be in Arabic. While you have the option to translate them or include another language, issuing the e-invoice in Arabic is compulsory.
Implementation of ZATCA in Odoo
With Odoo, it is possible to configure it to meet the Saudi ZATCA e-invoicing standards. This functionality is exclusive to Odoo versions 15 and 16.
As a flexible ERP solution, Odoo provides an integrated e-invoicing module that adheres to Saudi regulatory standards.
For invoices in Arabic
Registration with ZATCA
1. Access the ZATCA e-invoice portal by clicking on "Login" and entering your username and password.
2. Ensure that you have prompt access to the phone number registered with ZATCA to receive the OTP from the portal within 2 minutes.
Integration of ZATCA with Odoo
1. Environment setup
We utilize Simulation mode to conduct invoice testing.
Once it transitions to Production mode, all invoices will be submitted to ZATCA.
Modify the company information, including:
- Name of the company
- Complete company address, including street, city, postal code, state, and country
- Number of the building, Plot ID, Neighborhood
- Scheme for identification, Identification Number
- Value Added Tax (VAT) number
- Currency of the company
3. Journal Setup
For every sales journal, one device will need to be onboarded.
Click on "Onboard Journal." Upon receiving the OTP from the Simulation Fatoora portal for each journal, a wizard will prompt you to input the OTP and request the CSID.
Input the OTP and finalize the process.
4. Workflow
Note: When creating a customer, it's important to verify whether they are an individual or a company.
For B2C invoices, the e-invoice status will be Reported, while for B2B invoices, the status will be Cleared.
Create an invoice either from a sales order or through accounting using the standard process.
You have the option to either click on "Process Now," which will promptly send the invoice to the Fatoora portal, or alternatively, all generated invoices will be automatically sent to the Fatoora portal at the end of the day.
Business-to-Business (B2B) Invoice:
As previously stated, Clearance is relevant for Standard documents (B2B), which pertain to B2B transactions and typically involve two VAT-registered taxpayers.
According to ZATCA's e-invoicing regulations, sellers must submit their Standard documents (B2B) for Clearance before presenting them to the buyer. In essence, a standard document (B2B) is deemed valid only if it has received clearance from ZATCA, indicated by ZATCA's Clearance stamp.
Business-to-Consumer (B2C) Invoice:
As stated earlier, Reporting is relevant for Simplified documents (B2C), which are utilized for B2C transactions. Consequently, according to ZATCA’s e-Invoicing regulations, taxpayers are permitted to submit their Simplified Documents (B2C) within 24 hours of the transaction's completion.
Template for Invoices
