Saudi e-Invoicing: Phase I QR Code vs. Phase II QR Code

Explore the differences between Saudi e-Invoicing Phase I and Phase II QR codes, their features, and compliance requirements for businesses.

Saudi Arabia has taken major steps to digitize corporate transactions, including the implementation of e-invoicing. Zatca approved e-invoicing in Riyadh improves tax compliance, security, and efficiency. The Zakat, Tax, and Customs Authority (ZATCA) implemented an e-invoicing mandate in two phases: Phase I and Phase II. These phases are intended to simplify tax reporting, reduce fraud, and improve transparency in commercial activities.

Here are some of the Saudi e-Invoicing: Phase I QR Code vs. Phase II QR Code

The Kingdom of Saudi Arabia (KSA) has adopted e-invoicing procedures to improve taxation and compliance with the Zakat, Tax, and Customs Authority (ZATCA). E-invoicing consists of two phases: Phase I (Generation) and Phase II (Integration). The two-phased structure includes QR codes, which are critical components for both phases when it comes to invoice verification and validation. The difference in the structure and requirements of QR Codes between the two phases has long been debated. The following article will go into detail about the Phase I QR Code and Phase II QR Code under Saudi Arabia’s e-invoicing policy.

A Brief Overview of KSA e-Invoicing Phases

Phase I (Generation phase)

This phase began on December 4, 2021, when any business was required to generate and manage invoices electronically in a standardized fashion. The following are some important highlights of Phase.

• Create computerized and streamlined tax invoices.
• An invoice should include essential elements including the seller’s name, VAT number, invoice date, and total amount.
• Include a QR code on simplified tax invoices so that ZATCA may verify them.
• Comply with ZATCA-approved submission formats and standards, such as XML or PDF/A-3 with embedded XML.

Phase 2 (Integration Phase)

This is the second phase of the e-invoicing implementation. It began on January 1, 2023. It now requires entities to conduct their operations in a way that allows for real-time reporting and system integration. Furthermore, such entities must meet the following criteria:

• The ability to integrate e-invoicing systems in real time with ZATCA’s platform. Enforced cryptographic stamping and a new QR Code format with additional data.
• Standard tax invoices are cleared, whereas simplified tax invoices are reported.
• All safety precautions and data transfer techniques must meet high requirements.

QR codes in Phases I and II.

QR Code in Phase I.

The introduction of QR Code in Phase I was primarily focused on simple tax bills, which featured basic invoice facts and were verified for legitimacy by scanning with mobile devices. The QR code in Phase I contains five necessary fields:

• The seller’s name is his or her registered business name.
• Value Added Tax (VAT) Registration Number is the supplier’s VAT number.
• Invoice Date and Time – The time stamp at which the invoice was generated.
• Total of the invoice (with VAT) – Total amount considering VAT.
• Value Added Tax Amount – Total value-added tax amount.

QR codes in Phase II

The QR Code has undergone significant development in Phase II, with the inclusion of cryptographic controls and additional invoice data. The new QR code in Phase II consists of the following six fields:

• Seller’s name is the same as Phase I.
• VAT Registration Number: Same as Phase I.
• Invoice Date and Time: Same as Phase I.
• Invoice Total (including VAT) – Same as Phase I.
• VAT Amount – Same as Phase I.
• A cryptographic stamp is a one-of-a-kind stamp created with a safe encryption algorithm.
• Invoice Hash – Digital signature to ensure the integrity of invoice data.

Key Differences Between Phase I and Phase II QR Codes

Purpose

• Phase 1 QR Code- Basic verification.
• Phase 2 QR Code- Secure authentication and integrity.

Applicable To

• Phase 1 QR Code-Simplified tax invoices
• Phase 2 QR Code-All invoices (simplified and standard)

Encoding Method

• Phase 1 QR Code-Base64 encoding
• Phase 2 QR Code-Cryptographically signed

Invoice Hash

• Phase 1 QR Code-Not included
• Phase 2 QR Code-Included for data integrity

Cryptographic Stamp

• Phase 1 QR Code-Not included
• Phase 2 QR Code-Included for security

Real-Time Reporting

• Phase 1 QR Code-Not required
• Phase 2 QR Code-Required for compliance

Integration with ZATCA

• Phase 2 QR Code-Not required
• Phase 2 QR Code-Required for invoice clearance

Conclusion

The deployment of ZATCA approved e-invoicing in Riyadh is a significant step in modernizing the Kingdom’s financial ecosystem. Understanding the distinctions between Phase I and Phase II QR codes is critical for businesses to comply with tax requirements and run efficiently. Phase I QR codes include only basic security measures to check invoices, whereas Phase II QR codes are encrypted with cryptographic privacy to safeguard data from unauthorized interference.

© 2024 Crivva - Business Promotion. All rights reserved.