GAZT publishes guide on invoicing and records keeping requirements
The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published a Guide on Invoicing and Records Keeping Requirements. The issuance of this guide should be welcomed by businesses as it provides more clarity on invoicing requirements with respect to both full and simplified tax invoices, as well as the requirement to keep records for VAT purposes in KSA.
The guide is currently available in Arabic on the GAZT website, and Deloitte is in the process of arranging a full English translation. However, some of the key points covered within the Guide are summarized below:
- There is no specific layout or format that a tax invoice must follow, but the guide confirms the invoice must include all of the requirements stated in the VAT Implementing Regulations in order to be valid. There is no requirement to sign or stamp the invoice, but it is preferable to have it signed or stamped.
- A simplified tax invoice must be issued in any cases when a taxable supply is made, but a “full” tax invoice is not required. This would include the case of a supply made to a customer who is a non-registered individual.
- It is a mandatory requirement to issue the tax invoice in Arabic. In addition, the invoice can be translated to any other language, but it will be deemed a translation only and the Arabic language content will be seen as official.
- Numbers can be written as 1234 or ١٢٣٤
- If a currency other than Saudi Riyal is used in a transaction, the VAT amount should be converted to Saudi Riyal using the daily rate prescribed by the Saudi Arabian Monetary Authority on the date that the relevant supply takes place in accordance with the Agreement and the Law.
- Tax invoices must include a sequential number which uniquely identifies the tax invoice. Different branches of a taxable person can use a different stream of sequential numbers as long as the invoice number can be clearly identified within the sequence, and it can be shown that it is unique.
- Supplier details on the invoice must be include the legal name of the supplier as mentioned on his registration certificate. The use of a ‘trade’ name is not acceptable. The invoice must also include the Tax Identification Number of the supplier. Stating a correct Tax Identification Number will be considered as very important as it will allow the customer to verify the status of the VAT registration of the supplier, which can be done through the search engines available on the GAZT website.
- The VAT payable amount stated on the tax invoice should be shown in Saudi Riyal and if required, rounded to the nearest Halalah. The rounded numbers should be the same numbers to be used for VAT reporting.
- Any such Tax invoice must be issued and delivered (on paper or electronically) to the customer at the latest on the fifteenth day of the month following the month in which the Supply took place.
- Guidance is also provided regarding the issuance of tax invoices in special cases, such as:
- Conditions allowing a third party to issue invoices on behalf of a supplier;
- Self-billing invoices;
- Invoices issued under the profit margin scheme;
- Summary tax invoices; and
- Credit and debit notes
Businesses should start reviewing their tax invoices, credit notes, and record keeping practices in order to confirm whether they are compliant with the guidance set out in the Guide. Such a review could be undertaken as part of a wider exercise to review the VAT compliance process during the first 6 months of VAT and assess whether the current governance and controls framework in place is fit for purpose, and the need to undertake this process is a good reason for undertaking a wider review of the business’s compliance with its VAT accounting obligations.