e-invoicing Phase 2 Waves in Saudi Arabia

Tally Solutions | Updated on: May 19, 2023

The Zakat, Tax and Customs Authority (ZATCA) shared news of the first wave on 24th June 2022. The first wave will affect resident taxpayers who are subject to VAT and have a turnover of over SAR 3 Bn in 2021. The 2nd phase of e-invoicing will be implemented by the first wave starting on 1st January 2023. At present, the number of waves of taxpayers is unclear. It has been clarified that the respective taxpayers will be informed about phase 2 implementation at least 6 months in advance. The due date of phase 2 implementation has not been mentioned yet.   

What is phase 2 of e-invoicing?

The first 1 (also known as the Generation Phase) showed positive results for KSA toward transparency. The second phase of the Integration Phase is going to further help KSA achieve that goal. The 2nd phase of e-invoicing is when the different waves of taxpayers are required to integrate the e-invoicing solution they use with the ZATCA platform (or the Fatoora). There will be additional requirements that taxpayers must keep in mind when generating e-invoices for their customers in phase 2 of the e-invoicing process.

The requirements of the mandatory fields for the two phases are different as some additional requirements are present in phase 2 implementation of e-invoicing. Let us explore the two types of invoices; B2B and B2C. The B2C is a simplified tax invoice while the B2B is referred to as a tax invoice. 

For B2C invoices, the additional e-invoice fields that must be mandatorily present for the phase 1 requirements include the invoice type, QR code, and invoice reference number. The phase 2 requirements include the subtotal inclusive of VAT at line-item level. For B2B invoices, the additional fields of the invoice in phase 1 of e-invoicing include invoice type and invoice reference number (IRN). The additional fields of the invoice in phase 2 are QR code, invoice taxable amount, subtotal (exclusive of VAT), subtotal (inclusive of VAT), and additional seller ID.

Step-by-step process to generate an e-invoice and IRN

TallyPrime is a compliant e-invoicing software that allows you to generate all types of e-invoices necessary in KSA. It is a complete accounting and business management software solution for MSMEs that lets you do a multitude of tasks with ease. It is a user-friendly software solution that has features.

You need to first ensure you have the latest TallyPrime version which is 2.0 or above. You can check the eligibility on its website and upgrade if required and enable e-invoice capability. This needs to be done only once. Once the setup is complete, the following is a step-by-step procedure for generating an e-invoice using TallyPrime. 

Step 1: Create a voucher and verify the e-invoice details

The first step is to create a voucher by going to Gateway of Tally and then Voucher and then Sales. You need to then view the e-invoice details by selecting ‘Show e-invoice details.’ You must make sure it is a ‘yes’ as that verifies the e-invoice details. Note that the voucher details fields cannot be changed but can only be verified.

Step 2: Save voucher

You can then press Y to accept or click on ‘Yes’ on the bottom right-hand side of the screen. By pressing Ctrl and A you will save the voucher you are viewing currently. Once you do this, you will not be able to modify or delete this voucher but can view the transaction and print it.

Step 3: Print the e-invoice

If you want to print every invoice after every sales transaction then you can set up the Sales voucher type. You can choose ‘Print voucher after saving’ by clicking on Yes in the ‘Voucher Type Alteration’. Or you can print the invoices that you will choose by going to the Day Book. You can get there by Gateway of Tally and then Day Book. After you are done selecting, you can press Ctrl and P to print that particular transaction. You can ensure the correct details by taking a look at the transaction first using preview.

The default print language in TallyPrime is English meaning the e-invoice will always print the e-invoice in English. You can easily print a bilingual e-invoice by going to Configure or pressing C and then changing the Print Type to Bilingual. Once you do this, the e-invoices will be printed in English and Arabic.

TallyPrime enables you to generate e-invoice reports where you can view every single transaction. It includes all important e-invoice details such as VAT number, transaction type, IRN, date, and so on. These reports can also be printed. TallyPrime is a sophisticated software solution that prevents tampering with e-invoices. However, if somehow a transaction was altered, then the transaction is shown as Tampered so that you can do the needful.