Today let’s dive into some common ZATCA Phase 2 FAQs,
The transition to ZATCA Phase 2 E-Invoicing (the Integration Phase) is a significant change for businesses in Saudi Arabia. It moves beyond just creating digital invoices and requires deep integration.
If you find the regulations confusing, you’re not alone! Our ERP experts have broken down the Top 10 Frequently Asked Questions about ZATCA Phase 2 into simple, easy-to-understand answers.
1. What is ZATCA Phase 2 E-Invoicing?
In Short: Phase 2 is about connecting your invoicing system directly to the ZATCA (Zakat, Tax and Customs Authority) platform, known as FATOORA. It ensures real-time or near real-time validation and reporting of all your sales invoices.
2. Is Phase 2 mandatory for all businesses in Saudi Arabia?
No, but it will be soon! It is being rolled out in waves based on a company’s annual taxable turnover. If your turnover is above the threshold for the current wave ( SAR 1 Million+), it is mandatory, and you must comply by your notified deadline.
3. What is the main difference between Phase 1 and Phase 2?
- Phase 1 (Generation): Required businesses to generate a compliant e-invoice (with a QR code) using an electronic system.
- Phase 2 (Integration): Requires the compliant e-invoice system to automatically connect and share data with ZATCA’s system.
4. What is the “Clearance” model for B2B invoices?
B2B (Business-to-Business) Invoices must be cleared by ZATCA.
- Your ERP/system sends the invoice data to ZATCA.
- ZATCA validates it, adds a unique Cryptographic Stamp, and sends it back.
- Only then can you issue the final, legally valid invoice to your business customer. This happens in real-time.
5. What is the “Reporting” model for B2C invoices?
B2C (Business-to-Customer) Invoices (Simplified Tax Invoices) use the Reporting model. You issue the invoice to the customer immediately, but your system must report the data to ZATCA within 24 hours of issuance.
6. What if my current accounting software doesn’t support ZATCA integration?
You must upgrade or switch to a ZATCA Phase 2-compliant ERP or e-invoicing solution. An existing system that only prints invoices is no longer sufficient; it must be capable of generating the required technical data (like the XML format) and communicating via API with ZATCA.
7. What is a “Cryptographic Stamp” and why do I need it?
It’s a digital signature created by your e-invoicing solution. It acts like an official seal that guarantees the invoice is authentic, hasn’t been tampered with, and was issued by your registered system. It is a key security feature of ZATCA Phase 2.
8. What format must the e-invoice be in?
The invoice data must be sent to ZATCA in a structured electronic file format, typically XML. The file you issue to the customer should be a human-readable PDF/A-3 format with the required XML data embedded within it.
9. What are the penalties for not complying with ZATCA Phase 2?
Non-compliance can result in significant financial penalties imposed by ZATCA. These can range from fines for failing to issue a compliant e-invoice to much higher penalties for failing to integrate your system by the specified deadline. Compliance is not optional!
10. How can an ERP system like Number One ERP help with ZATCA Phase 2?
A modern ERP system is essential because it:
- Automates Integration: Handles the complex API communication with the FATOORA platform automatically.
- Ensures Data Quality: Guarantees all required technical fields (like UUID, Hash, and Cryptographic Stamp) are correctly generated.
- Manages Process Flow: Automatically directs B2B invoices for Clearance and B2C invoices for Reporting, ensuring you meet the legal timelines.
Need an easy path to full ZATCA Phase 2 compliance? Contact us today!