Definition of electronic invoice, its types and applications
                With the rapid digital transformation witnessed by the world, the electronic invoice has become an essential element in modern business operations. The Kingdom of Saudi Arabia has adopted this system within Vision 2030, as it seeks to enhance transparency, combat commercial cover-up, and facilitate financial transactions. In this article, we will discuss the concept of electronic invoice, its types, and its applications, especially for those who are not specialized in the field of financial accounting management.
               An electronic invoice is a digital document that is issued, processed, and saved electronically, according to specific requirements by regulatory authorities, without the need for traditional paper handling. The electronic invoice must be compatible with local regulations, and include information such as invoice number, details of the seller and buyer, description of products or services, and amounts due.
               The Zakat, Tax and Customs Authority in the Kingdom of Saudi Arabia issued regulations governing the electronic invoicing system, which entered into mandatory force in December 2021. These regulations aim to facilitate business operations and enhance tax compliance.

Types of electronic invoices
There are several types of electronic invoices that differ according to the nature of the transactions and the parties dealing with them, the most prominent of which are:
1. Electronic tax invoice
  •  Used when conducting transactions between companies registered for value-added tax (VAT).
  •  Includes all tax details such as the VAT rate and the total amount after tax.
  •  Submitted directly to the Zakat, Tax and Customs Authority for review.
 
2. Simplified tax invoice
  •  Issued when dealing with the end consumer (B2C).
  •  Does not require the inclusion of buyer data such as the tax number.
  •  It is stored electronically and allows a paper copy to be issued when needed.
 
3. Electronic credit and debit notes
  •  Used to modify previous electronic invoices, such as correcting errors or modifying financial values.
  •  Includes a credit note (to reduce the invoice value) and a debit note (to increase or modify the value).
 
4. Electronic invoices designated for government agencies
  •  Used in transactions with government agencies (B2G).
  •  Follows special standards to ensure compliance and transparency in government operations.
 

Electronic Invoice Applications
Integration with Accounting Systems
          Electronic invoices in Saudi Arabia rely on integrated accounting systems that allow invoices to be automatically registered and sent to the Zakat, Tax and Customs Authority. These systems include Enterprise Resource Planning (ERP) programs that support financial and administrative operations. 
Instant Verification and Monitoring
          Through the Authority’s platform, invoices are immediately verified, which enhances tax compliance and reduces the chances of tax evasion and manipulation of invoices. 
Saving Time and Costs
          The shift to electronic invoicing helps reduce operating costs, as paper printing and physical storage of invoices are dispensed with. It also improves operational efficiency by automating documentation and invoicing processes. 
Enhancing Transparency and Combating Commercial Cover-Up
          The new system enables invoices to be tracked and verified, which enhances market integrity and reduces illegal operations. 
Integration with Artificial Intelligence and Data Analysis Technology
          The electronic invoice contributes to collecting and analyzing financial transaction data, allowing companies to improve their business strategies and make decisions based on accurate data.
 
Compliance Requirements for the Electronic Invoicing System
To comply with Saudi regulations, companies must ensure the following:
  •  Use an electronic invoicing system that complies with the requirements of the Zakat, Tax and Customs Authority.
  •  Include the QR Code in simplified invoices.
  •  Link with the Authority's billing systems to ensure immediate reporting of invoices.
  •  Ensure that invoices cannot be modified after they are issued, in accordance with security standards.
 
The electronic invoice is a pivotal step towards achieving digital transformation in the Kingdom of Saudi Arabia, as it contributes to improving tax compliance, reducing operating costs, and enhancing economic transparency. Despite the challenges associated with its implementation, the benefits it offers make it a sustainable strategic option for companies and individuals alike. As technological developments continue, more improvements and integrations can be expected that contribute to facilitating financial operations in the future.
 
Aamal Digital Company is one of the first companies to support the electronic invoice and also link with the Authority through all of the company's software.