RIYADH: Advances in technology have seen electronic invoicing become an essential part of business structures.
The billing method provides great benefits for both large corporations and small businesses, helping to reduce costs and time spent processing and printing paper invoices.
E-invoicing also shortens payment cycles, improves accounts reconciliation, enhances compliance, cuts the amount of physical storage space required, prevents errors, limits losses and fraud, promotes fair competition, reduces tax evasion, and improves relationships between suppliers and customers.
In addition, it offers great support to micro, small, and medium-sized enterprises, ensuring they operate in a fair and competitive business environment that helps to achieve growth targets. And it backs up MSMEs when applying for financing from commercial banks by providing accurate financial information about them.
Governments in countries such as Saudi Arabia can benefit from e-invoicing too, particularly in combating the shadow economy and limiting commercial concealment practices (any illegal business operation that enables non-national individuals or companies to invest or engage in trading activities they are prohibited from).
Commercial concealment has been a problem in the Kingdom for more than seven decades and costs the Saudi economy up to SR400 billion ($106.7 billion) annually.
Last year, the Saudi commerce minister announced a new law to regulate commercial transactions, introducing strict penalties for violators that vary depending on the classification of each concealment act. The penalties include imprisonment for a maximum of five years and/or fines of up to SR5 million.
In March, the government announced a national program to combat commercial concealment aimed at encouraging individuals in breach of the rules to come forward and take steps to legalize their position in the market without fear of being hit with regulatory penalties.
The Saudi Zakat, Tax, and Customs Authority recently launched its Fatoorah e-invoicing project to implement a system allowing the smooth exchange and processing of invoices, credit and debit notes between buyers and sellers.
The initiative will be rolled-out in two phases, the first coming into force for all taxpayers (excluding nonresident taxpayers) on Dec. 4. Stage two will be implemented on Jan. 1, 2023, when taxpayers will be able to access all the necessary authority e-invoicing services.
It is expected that the project will have a tangible impact on the national economy by curtailing the shadow economy and tackling commercial concealment.
The Saudi government has done a great job in dealing with both these matters by not only issuing a new law but also allowing violators to rectify their mistakes without being penalized.
Forcing all selling outlets to use the electronic payment system in trading activities will not only offer consumers varied payment options but also support government efforts to combat commercial concealment.
