As part of the digitalization of the economy, the kingdom of Saudi Arabia has started e-invoicing system which is being rolled out in two phases. This initiative aims to improve efficiency and simplify invoicing processes for businesses in KSA.

This e-invoicing in KSA, implemented by ZATCA (Zakat, Tax, and Customs Authority), demands resident taxpayers to send, modify and save invoices in compliance with the ZATCA e-invoice regulations. This initiative ensures accuracy in financial transactions allowing businesses to work more efficiently and securely.

Under ZATCA e-invoicing, it is necessary to integrate your ERP system with ZATCA system for more trade transparency. It can provide a standardized way of e invoicing KSA, which gives authorities the ability to easily detect fraudulent activities and reduce the frequency of audits. By ensuring compliance with tax regulations, businesses contribute to a more responsible financial system within the country.


Meet invoicing criteria for your business in Saudi using the right ERP software


Microsoft Dynamics 365 is a clear ERP choice for businesses of all sizes globally. Businesses across various sectors have benefited from its range of ERP functionalities. For those managing business operations through Dynamics 365 Finance and Operations, it is time now to connect with ZATCA e invoicing portal.

Understanding ZATCA e invoicing in KSA


ZATCA e invoicing in KSA is being done in two phases.

Phase 1, known as the generation phase, involves taxpayers creating and saving e-invoices. At this stage, taxpayers have access to the ZATCA e-invoicing system, but no data transmission occurs in the system.

Phase 2 is the integration phase. Here the taxpayers must connect their invoices with ZATCA system. The invoices prepared through your ERP system must be reported to ZATCA.

All applicable taxpayers must establish a connection between the generated e-invoice and the ZATA e-invoicing system. This integration of ERP with ZATCA makes trade more transparent and standardizes invoice reporting.

Therefore, applicable businesses in Saudi must integrate their ERP (Dynamics 365 Finance and Operations) with the ZATCA portal by 1st June 2024.


Dynamics 365 E-invoicing and Integration


Microsoft Dynamics 365 Finance and Operations provides in-built features for ZATCA integration. These features initiate e-invoicing and ensure compliance with ZATCA e-invoice system in KSA.

Before the integration phase, you need to fulfil certain requirements that serve as the basis for the following tasks.

Here are the steps for Dynamics 365 Finance and Operations integration with ZATCA

Company Onboarding: Company onboarding to ZATCA is mandatory. This ensures that your company in Saudi Arabia registers with ZATCA for E-invoicing process.

E-invoice creation: After the integration with ZATCA, customer invoice data is transferred and validated with ZATCA in real-time to create e-invoices.

ZATCA validation and approval: Invoice generated by D365 Finance and Operations is validated and approved by ZATCA. Upon the successful authentication of the submitted invoices, e-invoices are generated in real-time. ZATCA then provides a unique UUID (Universal Unique Identifier) and a QR code after the approval.

Invoice Verification: The QR code and the XML data which are embedded at the invoice establish the fact that the invoice has the ZATCA clearance.

Access Invoice: Users can easily access the invoice generated in PDF format with embedded XML from Dynamics 365 Finance and Operations app.

E-invoicing logs: E-invoicing logs provide insights into your invoice statuses.

Audit: ZATCA approved XMLs are archived in D365 F&O for easy retrieval. These archives contain key information such as invoice details, signatures, information provided by ZATCA, and this makes the audit easy.


Benefits of ZATCA e-invoicing in KSA


ZATCA e-invoicing opens doors for many opportunities. Through this opportunity your business can experience:

  • Quicker payments
  • Reduced costs
  • Faster processing
  • Financial transparency
  • Enhanced accuracy
  • Improved cash management
  • Reduce the usage of paper invoices
  • Increase efficiency in financial transactions

Integrate Dynamics 365 Finance and Operations with ZATCA


E-invoicing compliance is mandatory in Saudi. Non-compliance can lead to fines and complications. To ensure compliance with ZATCA and to integrate your D365 F&O with ZATCA portal, you can utilize LITS SERVICES expertise.

As a trusted Microsoft Partner and ZATCA e-invoicing solution provider, our professionals help you connect your D365 Finance app with ZATCA portal, ensuring 100% compliance.

As a leading e-invoice software provider in KSA, LITS SERVICES offer ZATCA e-invoicing solution that work with your Dynamics 365 ERP system and provides a seamless experience of e-invoicing in Saudi Arabia. We offer solutions to help businesses in KSA in achieving compliance with ZATCA e-invoicing phase 2 requirements.

Frequently Asked Questions


What is e-invoicing in KSA?

E-invoicing in Saudi, which is initiated by ZATCA (Zakat, Tax and Customs Authority) aims to digitize the invoicing process by replacing traditional paper invoices with electronic ones.

What is phase 2 of e-invoicing in KSA?

At the 2nd phase of e-invoicing, applicable businesses should integrate their ERP systems with ZATCA portal for real-time reporting of invoices.

Is e-invoicing compulsory for all business transactions?

Yes, e-invoicing is applicable for B2B, B2G, and B2C transactions.