Saudi Arabia Introduces Stronger Financial Record Keeping Requirements
New E-Invoicing Regulations Take Effect in Saudi Arabia
Riyadh, Saudi Arabia - December 4th, 2021 marked a significant milestone in Saudi Arabia’s efforts to strengthen its financial regulatory framework. The Zakat, Tax and Customs Authority (ZATCA) has implemented new e-invoicing regulations aimed at ensuring transparency and accountability in financial transactions.
Storage and Archival of E-Invoices: A Crucial Requirement
Under the new regulations, taxpayers are required to maintain accurate records of their electronic invoices by storing them in a dedicated physical server or cloud storage facility that complies with ZATCA guidelines. The data should be accessible through a direct link, which can be shared with authorities on demand.
Key Requirements for Data Storage:
- Store e-invoices and associated notes in a dedicated physical server or cloud storage facility.
- Ensure the data is accessible through a direct link that can be shared with authorities on demand.
- Use an external archival system to export and save invoices.
Data Storage Naming Convention
To facilitate easy identification and retrieval of invoices, taxpayers are required to follow a specific naming convention when storing e-invoices. This includes:
- VAT registration number
- Timestamp (date and time of generation)
- Invoice reference number
Tax Audits and Data Storage Responsibilities
Taxpayers subject to tax audits may be required to provide unrestricted access to their e-invoicing data. Failure to maintain accurate records or comply with ZATCA regulations can result in serious implications, including fines and penalties.
Challenges in Data Storage and Archival
Taxpayers may face challenges in implementing the new regulations, particularly when dealing with bulk invoices. They must ensure that their e-invoicing solution is capable of handling large volumes of data and that they have uninterrupted access to online cloud services. Additionally, taxpayers are advised to install strong firewalls and anti-virus software to protect against online threats.
Outsourcing Data Storage Option
To mitigate the risks associated with data storage and archival, taxpayers may consider outsourcing their invoice generation process to a third-party service provider. However, even in this scenario, the taxpayer remains responsible for any breaches or non-compliances.
The ZATCA’s new e-invoicing regulations aim to promote transparency and accountability in financial transactions, ensuring that taxpayers maintain accurate records of their electronic invoices. As the regulations come into effect, taxpayers are advised to carefully review and implement the necessary measures to ensure compliance.