The Process to Solve the Failed Invoices in Phase II
When ZATCA sends back a failed invoice, it will provide the reason for the failure. Accordingly, you must correct the errors and re-generate the e-invoice. Solving the failed invoices varies based on the type of invoices, such as a B2B or B2C invoice.
Resolving a Failed B2B Invoice
You will have below two options based on ERP functionality to solve a failed B2B invoice:
Option 1: When your ERP doesn't allow to edit the failed invoice
You've to identify the reasons for failure and issue a credit note to nullify the invoice in your books. Then you should generate a new invoice with the correct details.
Option 2: When your ERP allows you to edit the failed invoice
In this case, you can correct the errors in the same invoice and re-submit it on the ZATCA portal.
Resolving a Failed B2C Invoice
It is to be noted that you should have shared the invoice immediately with your customer once it is raised. However, there's a chance that the ZATCA found errors when you reported the same invoice within 24 hours from the time of generation.
In such a case, you must correct the errors and re-submit the same to the ZATCA portal. Also, it is your choice whether to share the corrected invoice with the customer or not. However, in practice, it is extremely difficult to share the physical copy of the corrected B2C invoice with your customer. Thus, you can only share the corrected invoice with your customer through electronic means such as email, WhatsApp, etc.
Also, in both B2B and B2C transactions, Previous Invoice Hash (PIH) and Invoice Counter Value (ICV) should be maintained correctly either for corrected or new invoices.
Reasons for Failures While Generating the e-Invoices
Initially, there is a chance for the failure of e-Invoices while generating them. Below are a few possible reasons for failures while generating the e-Invoices:
Selecting the wrong invoice type , such as B2C instead of B2B
Not mentioning all mandatory fields such as invoice date, UUID etc.
Inputs given are not as per ZATCA validations
Mentioning the wrong type of supply, such as exempted instead of taxable
Incorrect calculation of the total VAT amount
Incorrect calculation of total invoice amount
Not quoting or mentioning a wrong taxable value under VAT breakdown
Mentioning the wrong tax amount under the VAT breakdown, such as zero-rated instead of taxable
e-Invoices for advance payments in KSA
Advance payments attract Value Added Tax (VAT) in Saudi Arabia, and businesses must generate e-invoices for the same. Also, under the KSA VAT invoice , you must issue an invoice within 15 days from the end of the month in which the advance is received.
Suppose you received an advance of 1000 riyals on 10 January 2023; You must issue a tax invoice before 15 February 2023.
Let's take a look at different scenarios in advance payments:
Scenario 1: When received 100% advance
In cases when you receive 100% advance for the supply of goods or services, you must issue a tax invoice mentioning the advance received and VAT on it.
Once you provide goods or services, you shall adjust the advance against the total invoice value and issue the final tax invoice.
Scenario 2: When received part of the advance
You must issue the invoice even if you received part of the advance. So, after providing goods or services, you must adjust the part advance against the total invoice value and issue the tax invoice accordingly.e...