ZATCA Implements E-Invoicing in Saudi Arabia: How Can Hospitality Comply?

E-invoicing in the hospitality industry plays a vital role. However, the guidelines vary from country to country. And today, I am addressing one such addition of e-invoicing in Saudi Arabia.

In December 2020, Zakat, Tax and Customs Authority (ZATCA) of the Kingdom of Saudi Arabia (KSA) announced that the implementation of e-invoicing in Saudi Arabia will be mandatory effective from 4th December 2021.

Following that, on 28th May 2021, ZATCA also published the regulations specifying the terms, requirements, and conditions related to e-invoicing in Saudi Arabia.

And lately, this entire scenario has been a talk of the town. While many hotels and restaurants in KSA are getting started with all their processes to adhere to the latest protocols, many are perplexed.

If you aren’t aware of all the happenings around the implementation of e-invoicing in Saudi Arabia, do not fret. This blog will break down all the ins and outs for you.  

What is E-Invoicing?

I am sure this is definitely one of the questions that you must be having in your mind after getting to know about the e-invoicing implantation in Saudi Arabia. So, let me clarify that as well.

Electronic invoicing (e-invoicing) is a form of billing (or you can also call it a procedure) for businesses (hotels, restaurants, and other hospitality establishments in this case) to present and monitor transactional documents between buyer and seller.

This entire process is done through an integrated electronic solution. And is also used to ensure the terms of the business agreements.

Further, an e-invoice contains data in a structured format and can be automatically imported into financial systems, eliminating the task of manual data input.

How ZATCA E-Invoicing Implementation Will benefit Hospitality?

Hotels and restaurants are supremely transactional businesses. And there are times when it’s really hard to track finances because of all the conventional forms of billing or invoicing.

For example:

Café Red has been using traditional invoicing from the very get-go. However, lately, they have expanded their business. Meaning, the number of guests walking into their café/cafes has significantly increased.

Now, do you think processing hundreds (or thousands) of invoices per month manually is feasible? 

Also, imagine how tough it is going to be during the financial audits.

For the smooth functioning of a hospitality establishment and to abide by the country’s protocols, it is imperative to track finances the right way.

And this is where electronic invoicing comes into the picture. Now, with the new ZATCA guidelines in place, things are going to get better for accommodation providers and restaurants.

The e-invoicing implementation will help hotels in doing away with time-consuming, error-prone conventional paper-based invoicing.

With e-invoicing, all the financial data can be mapped straight into the invoicing system without any manual keying. Meaning? hotels can have detailed management information they need to make business improvements, enhance profitability, and remain competitive.

Not to mention, quick processing, fewer errors, minimum administration costs, payment automation, traceability, etc. are some of the top benefits of electronic invoicing.

The E-Invoicing Implementation Process and Requirements

To make the implementation process as smooth as possible, ZATCA has released notes on the entire shebang of e-invoicing in Saudi Arabia. The release clearly states all the nuts and bolts.

Let’s address all of them.

The phases of implementation

The e-invoicing implementation has been divided into two phases. Also, both the phases are dated in such a way that give hotels and restaurants an ample amount of time to smoothly work towards it.

• Phase One (generation phase) 4th December 2021: In this phase, taxpayers (hospitality businesses) need to start generating e-invoices and store them using compliant systems.
• Phase Two (integration phase) 1st January 2023: For this phase, taxpayers (hospitality businesses) are instructed to integrate their e-invoicing systems with ZATCA.

How can hoteliers comply with phase one implementation of e-invoicing in Saudi Arabia?

Now that ‘phase one’ of e-invoicing in KSA is already live, let me give you some tips to stay compliant with it.

1. Use the ZATCA complaint e-invoicing system

The first and foremost thing hotels must do is equip themselves with an e-invoicing system that is compliant with the requirements of the first phase.

But how can hotels do that?

So, basically, the technical requirements are fulfilled by the solution provider of the hospitality business, or the technical team for the in-house built solutions.

Example:

If you’re a restaurateur, you can reach out to your restaurant POS system provider and ask them to help you out with the e-invoicing solution that is compliant with all the ZATCA requirements.

And if you run a hotel, then you can reach out to your hotel management solutions provider.

2. Generate and store e-invoices

As mentioned, phase one is about generating and saving e-invoices. Because manual and handwritten invoices are no longer considered a complaint.

Therefore, hotels must get started with it while complying with the latest guidelines of ZATCA.

3. All the elements of the tax invoice must be fulfilled

Next up, according to ZATCA, there are no specific file formats mandatory for the 1^st phase. However, hotels must ensure that all fields in the invoice are in accordance with VAT regulations in addition to:

• Tax invoice: VAT number of the buyer (if s/he is a registered VAT payer). QR code can also be added (optional).
• Simplified tax invoice: A mandatory QR code must be generated by the hotel’s ZATCA-complaint e-invoicing machine.

eZee Can Help Your Hotel and Restaurants Stay Complaint to KSA’s E-Invoicing Guidelines

Having more than a decade of in-depth experience in travel technology, eZee is a leading hospitality tech solution provider. Through the years, eZee has worked with hundreds and thousands of hospitality establishments from all around the world.

Now, amid the ongoing shebang of e-invoicing in Saudi Arabia, eZee has something new in the store to offer.

For hotels and restaurants to adhere to the latest e-invoice regulations in Saudi Arabia, eZee has made its hospitality management software compliant with ZATCA.

Meaning, accommodation providers and restaurants in Saudi Arabia can now generate and store complaint electronic tax invoices right from eZee’s hotel management system and restaurant POS software through the E-Invoice QR Reader KSA app.

How does it work?

When you equip your business with compliant electronic invoicing, the bills generated will have a QR code (which is mandatory for simplified tax invoices).

Next up, there’s an app called QR Reader KSA app. You can use this app to scan the QR code and all the bill details will be shown.

Now, there’s one more thing you must keep in mind. Certain mandatory fields need to be shown upon scanning a QR code in a simplified tax invoice:

Seller’s name (hotel, restaurant, or any other hospitality business, in this case)

• VAT registration number of the seller
• Timestamp of the e-invoices
• VAT total
• e-invoice or credit/debit note total (with VAT)