What does ZATCA examine during an e-invoicing audit?

During an e-invoicing review or audit, ZATCA may examine whether the business issues and retains electronic invoices in the required format, includes the mandatory invoice information, applies the correct VAT treatment, and follows the applicable Phase 1 or Phase 2 requirements. For Phase 2 taxpayers, this can include reviewing the integration with FATOORA, clearance or reporting responses, XML structure and required security features.

Businesses should also be prepared to explain invoice sequences, counter values, previous invoice hashes, credit and debit notes, and the relationship between invoices and their supporting transaction records. Where a zero-rated export or another special VAT treatment is used, the business should retain the evidence supporting that treatment.

Good audit preparation depends on consistent records across the e-invoicing system, ERP, accounting ledger and VAT returns. Businesses should be able to retrieve an invoice and its related documents without changing the original record.

Key points

• ZATCA can examine invoice format and mandatory fields.
• VAT calculations and tax classifications may be reviewed.
• Phase 2 integration, clearance and reporting records may be examined.
• Security features, invoice counters and hash sequences should be maintained correctly.
• Credit notes and debit notes should be linked to the relevant original invoices.
• Supporting documents should substantiate export and zero-rated transactions.
• Electronic records should be retrievable and consistent with accounting and VAT records.