Step-by-Step E Commerce Invoice Guide for Online Stores

Issuing an e commerce invoice in Saudi Arabia is mandatory for all businesses subject to VAT. Online stores, being one of the fastest-growing sectors, are no exception. These stores must integrate e invoicing systems to achieve comprehensive digital transformation, aligning with Vision 2030’s goal of a sustainable digital economy.

But what qualifies as e commerce in Saudi Arabia? Do the steps for issuing an e commerce invoice differ from other commercial activities? Let’s explore these questions in detail.

An Overview of E Commerce in Saudi Arabia

According to the Saudi Ministry of Commerce, any activity that offers services or products, advertises them, or facilitates transactions through electronic means is classified as e commerce.

This classification applies regardless of whether the activity is fully or partially conducted online.

The ministry defines an online store or platform as an electronic medium that allows service providers to showcase, sell, or advertise their products or services and exchange related data.

In 2021, Saudi Arabia had approximately 36,000 online stores and platforms, compared to around 29,000 in the previous year, as reported by Statista.

Globally, the Kingdom ranks 29th in the e commerce market, with projected revenues reaching $14,159.9 million by the end of 2024.

Criteria for Issuing an E Commerce Invoice in Saudi Arabia

An e commerce invoice is a digitally issued and stored invoice generated using specialized systems designed to meet the requirements set by the Zakat, Tax, and Customs Authority (ZATCA) in Saudi Arabia.

All online stores with a VAT registration number must issue e commerce invoices for sales transactions, either as simplified invoices for consumers or tax invoices between businesses.

Given the remote nature of e commerce transactions, Saudi authorities have established specific criteria to protect both merchants and consumers:

Ensure that e commerce invoices are storable, with consumers retaining a copy.
Include confirmation of contract creation and its date in the invoice.
Provide total product prices, delivery charges, VAT, and payment/delivery arrangements.
Specify the product delivery date and location in the invoice.
Incorporate warranty details (if applicable) and post-sale services.
Inform consumers about the store’s return and exchange policy.

Steps to Issue an E Commerce Invoice

To comply with Saudi Arabia’s regulations for e commerce invoices, merchants should follow these steps:

1. Comply with Phase 2 E Invoicing Requirements

Since January 1, 2023, Phase 2 of e invoicing mandates businesses to issue invoices with specific formats and additional elements.

Merchants must issue and store invoices in XML or PDF/A-3 formats with embedded XML, ensuring seamless storage and transfer.

Additional elements include: QR codes for simplified invoices and total amounts, including VAT.

2. Issue and Integrate E Commerce Invoices with the FATOORA Platform

Once issued, whether tax or simplified, e commerce invoices must be uploaded to the FATOORA platform for verification and sharing with ZATCA.

Integration with the platform requires a certified e invoicing solution to bridge the merchant’s accounting system and ZATCA’s network. Collaborating with a ZATCA-certified provider ensures secure and efficient integration.

For tax invoices: Send a preliminary version to ZATCA for validation before delivering it to customers.

For simplified invoices: Send the invoice directly to the customer and upload it to ZATCA within 24 hours.

3. Protect Consumer Data and Privacy

Merchants must safeguard personal data and avoid using it for marketing without consumer consent.

Online stores can only retain consumer data for the duration necessary to complete the transaction or service. Moreover, they must provide consumers with a clear way to delete their accounts and stop receiving promotional messages.

Additionally, intermediary platforms are responsible for protecting stores from cyberattacks, invoice fraud, or phishing attempts by regularly updating security measures and training employees.

Simplify E Commerce Invoice Integration with EZ Integrated

With advanced digital solutions, EZ Integrated makes e commerce invoice issuance and integration with the FATOORA platform seamless and secure.

By partnering with EZ Integrated, you’ll benefit from:

Flexible Integration: Connect your current invoicing system to FATOORA without replacements.
24/7 Support: A dedicated team ensures compliance and manages regulatory updates.
Data Security: Robust solutions safeguard your business and consumer data from fraud and breaches.