ZATCA e-invoicing for restaurants, explained

A restaurant group planning its first venue in Riyadh asks its till supplier a simple question: will the receipts be accepted in Saudi Arabia? The answer comes back full of terms the owner has never heard: generation and integration phases, simplified tax invoices, clearance and reporting, cryptographic stamps, onboarding a device. The owner realises that in Saudi Arabia, a receipt is not just a piece of paper for the guest. It is a tax document with rules of its own.

ZATCA e-invoicing is Saudi Arabia's system of electronic invoicing, run by the Zakat, Tax and Customs Authority. It requires businesses registered for VAT to issue their invoices electronically, through systems that meet set requirements, and, in its second phase, to connect those systems to the authority's own platform. For a restaurant, where every bill is an invoice, it shapes the choice of till as much as any feature.

This guide explains what ZATCA e-invoicing asks of a restaurant in operator terms: the two phases, the two kinds of invoice, what a till must do and the questions to put to any system. It draws on ZATCA's own published guidance, which is updated from time to time: check the current requirements with ZATCA or an adviser before acting. Every venue and figure in it is an example.

ZATCA e-invoicing is the requirement to issue tax invoices, and the debit and credit notes that correct them, electronically, in a structured format, through compliant systems. ZATCA's guidance is clear that a paper invoice scanned or copied into a computer does not count: the invoice must be created electronically in the first place.

The ZATCA e-invoicing portal is the official source for the rules, the technical requirements and the guidance for businesses. Every requirement in this guide should be checked against it.

The rules apply to businesses that are registered for VAT in Saudi Arabia. A restaurant registered for VAT, as most established restaurants are, must issue its invoices through a compliant e-invoicing solution.

ZATCA describes compliant solutions broadly: online cash registers, virtual cash registers on tablets, software on a computer, phone or tablet, and cloud-based systems can all qualify, as long as they meet the requirements.

E-invoicing was introduced in two phases. The first, the generation phase, began on 4 December 2021 and required businesses to generate and keep their tax invoices and notes electronically, using compliant solutions.

The second, the integration phase, began on 1 January 2023 and is being applied in waves to groups of taxpayers. In this phase, a business's e-invoicing solution must be integrated with ZATCA's platform, known as Fatoora, and ZATCA notifies each business of its integration date at least six months in advance.

In phase one, a restaurant must create every invoice electronically, in its till or invoicing system, with the required fields, give it to the guest and store it. Handwritten invoices, or invoices from a system that does not meet the requirements, are not allowed.

For most restaurants, this meant making sure the till was a compliant e-invoicing solution and that receipts included the required information, including a QR code on simplified invoices.

In phase two, the till does more. As well as creating and storing each invoice, it must send invoices to ZATCA through an integrated connection with the Fatoora platform, and each invoice carries additional technical elements that show it has not been altered.

For a restaurant, the practical change is that the till must be connected to ZATCA, set up and registered with it, and able to send its invoices within the required time.

ZATCA distinguishes two kinds of invoice. A tax invoice is usually issued from one business to another, with all the tax invoice details. A simplified tax invoice is usually issued from a business to a consumer, with the details required for simplified invoices.

For a restaurant, most bills to guests are simplified tax invoices. Tax invoices arise when the restaurant bills another business, such as a company booking a corporate dinner or a catering client who needs a full invoice.

In phase two, a simplified tax invoice follows a reporting route. The restaurant creates the invoice with all the required fields, gives it to the guest, stores it and reports it to ZATCA through its integrated system within a maximum of 24 hours.

The guest receives their receipt at once, as before. The reporting happens in the background, within the time limit, which is why the till must be connected reliably.

A tax invoice to another business follows a clearance route. The restaurant creates the invoice and sends it to ZATCA through its integrated system, ZATCA clears it, and the cleared invoice is then shared with the buyer.

For a restaurant that invoices companies for events or catering, this means the invoice must pass through ZATCA before the client receives it. A system that cannot do this cannot issue those invoices.

Simplified tax invoices carry a QR code that the buyer can scan with ZATCA's VAT app to check the invoice. ZATCA's guidance lists its basic contents: the seller's name, the seller's VAT number, the date and time of the invoice, the VAT amount and the total including VAT.

In phase two, the QR code carries more information, including elements of the invoice's cryptographic stamp. The till generates it; the restaurant's job is to make sure it appears on every simplified invoice.

E-invoices must be generated and stored in a specified format: XML, or a PDF of the PDF/A-3 type with the XML embedded. The guest may see a printed or digital receipt, but behind it the system holds the structured electronic invoice.

This is a technical requirement for the system, not something staff handle. But it is a useful question for any supplier: in what format does your system generate and store invoices?

In operator terms, a till used in Saudi Arabia must create every invoice electronically with the required fields, include the QR code on simplified invoices, store invoices securely and, once the business reaches its integration wave, connect to ZATCA, report simplified invoices within 24 hours and send tax invoices for clearance.

It must also handle corrections properly. Mistakes are corrected with credit and debit notes, which follow the same rules, rather than by editing or deleting the original invoice.

ZATCA's guidance lists functions that compliant systems must not have. Among them: allowing invoices or records to be tampered with, creating more than one sequence of invoices, lacking user management, allowing the system's date and time to be changed and, in phase two, allowing the cryptographic stamp's private key to be exported.

It also lists things businesses must avoid, including handwritten invoices, non-compliant systems, invoices that do not meet the requirements and deleting invoices after they have been generated.

In phase two, each e-invoicing device or system must be registered, or onboarded, with ZATCA. ZATCA's guidance describes the process through the Fatoora portal: the business logs in, chooses to onboard a device, generates a one-time password and enters it in the e-invoicing solution, which then connects.

Each till or invoicing system that issues invoices needs to be onboarded. A restaurant with several tills should plan the onboarding for each, with the supplier's help.

Compliance depends on the business's integration wave. ZATCA notifies each taxpayer of its date in advance, and from that date, the business's system must be integrated and reporting.

Watch for the notification, and check with your till supplier well before the date that the system is ready, onboarded and tested. Leaving it until the final weeks risks invoices that do not meet the rules.

Restaurants void items, refund guests and correct mistakes every day. Under e-invoicing, corrections to an issued invoice are made with credit or debit notes, which are themselves electronic documents with their own requirements, rather than by altering or deleting the original.

Ask how the till handles voids before and after an invoice is issued, refunds, and corrections, and how each appears to ZATCA. Daily habits on the floor must fit the rules.

The team does not need to understand the technical side of e-invoicing, but it does need to follow the habits that keep invoices compliant: voids and corrections done the right way, refunds processed through the system rather than by hand and full tax invoices issued when a company asks for one.

Include these in the till training for every new starter, and remind the team when the rules or the system change. A compliant system used wrongly can still produce invoices that do not meet the requirements.

A restaurant group with several branches in Saudi Arabia needs every branch's tills and invoicing systems to be compliant and onboarded. Each device that issues invoices must be set up correctly, and each branch's invoices must carry the right details.

Plan the rollout branch by branch with the supplier, and keep a list of every device, where it is and when it was onboarded. A device added later, such as a new till for a terrace, must be onboarded before it issues invoices.

E-invoicing changes bookkeeping too. Every invoice is stored electronically, in a structured format, which makes the records easier to keep and harder to alter. The accountant can rely on the invoices as the record of sales.

Agree with the accountant how the e-invoicing records reach them, and how the VAT return is prepared from them. Our guide to accounting integration that saves a day a month covers how takings should reach the accounts.

Payment reconciliation, matching the till's takings with what reaches the bank, works as it does elsewhere: card takings matched with the card provider's payments, cash with cash banked and transfers with the bank's records. E-invoicing does not change how payments are taken, but it makes the sales records more reliable.

Reconcile weekly. A difference between the invoices issued and the money received is easier to explain within days than at the end of the month.

VAT in Saudi Arabia is charged at fifteen per cent, and every invoice must show the VAT correctly. Menu prices, the VAT on each item and the totals on each invoice must all be right, or the invoices will not meet the requirements.

Check the till's tax settings before the first service, and test invoices for a typical bill, a bill with a discount and a refund.

E-invoices must be stored, and kept available, as the rules require. The system should keep every invoice and note securely, unaltered and retrievable, for as long as the law requires.

Ask the supplier where invoices are stored, how long they are kept and how they can be retrieved if the business changes systems. Records that cannot be produced when the authority asks are a compliance problem, however carefully they were issued.

ZATCA can impose penalties for failing to meet the e-invoicing requirements, such as not issuing compliant invoices or not integrating on time. The details are set out in ZATCA's rules and guidance.

Treat compliance as a cost of trading in Saudi Arabia, like the VAT itself. The cost of a compliant system is small beside the cost and disruption of getting it wrong.

For a restaurant opening in Saudi Arabia, e-invoicing is one of the first questions to ask any till supplier, before features or price. A till that cannot issue compliant invoices, or cannot integrate with ZATCA when required, cannot be used, however good it is otherwise.

Ask for evidence: whether the system is a compliant solution, how it integrates with Fatoora, how devices are onboarded and whether it is already used by restaurants in Saudi Arabia. Ask other operators which systems they use.

Put the same questions to every supplier. Does your system generate e-invoices that meet ZATCA's requirements? Does it integrate with the Fatoora platform, and how are devices onboarded? How does it report simplified invoices and clear tax invoices? How are voids, refunds and corrections handled? What happens if the connection to ZATCA is lost? Who supports it, in which hours and in which language?

Write down the answers and keep them. If a supplier cannot answer clearly, treat that as an answer.

Phase two depends on a connection to ZATCA, and connections drop. Ask how the till behaves when the internet is lost: whether it can continue issuing invoices and report them once the connection returns, within the time allowed.

A till that stops issuing invoices when the internet fails can stop a service. One that keeps working and catches up afterwards protects both the service and compliance.

For a UAE operator, ZATCA e-invoicing is often the biggest systems difference between the two markets. A till that works well in Dubai may not issue compliant Saudi invoices, and a group may need a different system, or an additional one, for its Saudi venues.

Our guide to the Saudi restaurant market for a UAE operator covers the other differences to settle before opening across the border.

ZATCA updates its rules, guidance and technical requirements from time to time, and the integration waves continue to bring more businesses into phase two. A system that is compliant today needs to stay compliant.

Ask your supplier how they keep up with changes, and check ZATCA's portal yourself now and then. Responsibility for compliance rests with the business, not the supplier.

Test the system well before the integration wave arrives: a typical guest bill, a bill split between guests, a refund, a void after the bill was printed and a full tax invoice for a company. Check that each produces the right document, with the QR code where required.

Testing early leaves time to fix problems with the supplier. Testing in the final week leaves none.

For the guest, little changes: they receive a receipt, printed or digital, with a QR code they can scan if they wish. For the venue, the receipt is now one view of an electronic invoice held in the system and reported to ZATCA.

Make sure the receipt is clear and correct, with the venue's details, the VAT and the totals, because it is the part of e-invoicing the guest actually sees.

An invented Dubai group plans its first Riyadh venue. Its existing till works well in the UAE but does not issue ZATCA-compliant invoices, so the group puts the questions in this guide to three suppliers. One cannot explain how its system integrates with Fatoora. One can, but only through a third party with no local support. The third shows its compliant invoices, its onboarding process and a list of Saudi restaurants using it.

The group chooses the third for its Saudi venue, onboards each till with the supplier's help, tests a typical bill, a refund and a corporate invoice that needs clearance, and agrees with its accountant how the e-invoicing records reach the books. When the venue's integration wave arrives, the system is already connected and reporting.

servearound does not produce ZATCA e-invoices and does not connect to ZATCA's Fatoora platform, so a venue in Saudi Arabia needs a compliant e-invoicing solution for its invoices. servearound is not a substitute for one.

For a group with venues in both countries, servearound can hold the venues in one network, each in its own currency, with the network dashboard adding them up in the network's currency at the rate for each transaction's own date, and payment analytics show what was collected by day and how it was tendered, which helps with payment reconciliation. See pricing, or get in touch.

Saudi Arabia's requirement to issue tax invoices and notes electronically through compliant systems, integrated with ZATCA in its second phase.

Yes, to restaurants registered for VAT, which is most of them.

Generation, from 4 December 2021, and integration, from 1 January 2023, applied in waves.

The invoice usually issued to a consumer, such as a guest's bill, reported to ZATCA within 24 hours in phase two.

The invoice usually issued to another business, which ZATCA clears before the buyer receives it.

No. Invoices must be generated by a compliant electronic system.

With credit or debit notes, not by editing or deleting the original invoice.

On ZATCA's e-invoicing portal, which is updated from time to time.

ZATCA e-invoicing requires restaurants registered for VAT in Saudi Arabia to issue every invoice electronically through a compliant system, with the required fields and a QR code on guests' simplified invoices. Since its integration phase began, businesses are connected to ZATCA's Fatoora platform in waves: simplified invoices are reported within 24 hours, and tax invoices to other businesses are cleared before the buyer receives them.

For any restaurant entering the Saudi restaurant market, make e-invoicing the first question for any till supplier, onboard every device, handle corrections with notes rather than edits, keep bookkeeping and payment reconciliation in step and check ZATCA's portal for changes. Compliance rests with the business, so treat it as part of running the venue, not a detail left to the supplier.