A QR code is undoubtedly something you've heard of before and used at some point. A QR code is an increasingly popular resource in technology. It is one of the most versatile barcodes and is best for many industries, including marketing, communications, and stock control in factories and warehouses. The QR code is still in high demand, and its potential is endless as technology develops. In Saudi Arabia, QR code is used in e-invoices for validation, making it essential for users to select the right e-invoicing software in Saudi Arabia.

A QR code: What Is It?

A quick response code is referred to as a QR code. It is a simple two-dimensional barcode for digital devices to read and store data as a series of pixels in a grid pattern. Each QR code comprises many black squares and dots containing various information forms. A smartphone with a built-in camera, a QR scanner, or a specialised app can scan it.

A QR code makes it easier to digitise invoices. All significant invoice information is often included in the QR code. The dots in the code are converted into numbers or a string of characters by the device's software once it has been scanned.

e-Invoicing - A digital format of your invoice

e-Invoicing is the method of generating digital invoices that are issued and stored online. The Zakat, Tax and Customs Authority (ZATCA) in the Kingdom of Saudi Arabia (KSA) has released laws requiring businesses to implement the e-invoicing initiative in two phases, beginning on December 4, 2021. Paper manual invoices are no longer accepted after the launch of e-invoicing in Saudi Arabia.

The project to implement e-invoicing in Saudi Arabia has launched its first phase. Now, the taxpayer must use a compatible system to generate electronic invoices. An optional QR code for B2B invoices, whereas it is mandatory for B2C invoices or simplified invoices. It must be included on the e-invoice along with the buyer's VAT number, the date of issue, and the VAT breakdown.

The use of e-invoicing software in Saudi Arabia is a significant modification to the VAT system that is currently in use. It is one of many steps the KSA has taken to digitise its economic system.

Benefits of QR codes

It's simple to create and use QR codes. They provide a quick and easy solution to store data in a small area. Here are some key benefits of QR codes are –

  • Through a mobile app, you may validate and verify the invoice at any time, from anywhere.
  • Assists clients in determining the accuracy of the bills and ensures that they meet the standards of the Zakat, Tax, and Customs Authority (ZATCA).
  • Due to data standardisation, smooth trade, quick communication, quicker payments, and lower costs, using QR codes in e-invoicing promotes transaction efficiency for both businesses and governments.
  • By scanning a QR code, clients can easily switch from paper communications to a digital customer experience.
  • Using QR codes on electronic invoices in Saudi Arabia enables the tax authorities to monitor the shadow economy and identify fraudulent invoicing and associated practices.

What is the QR code's applicability on B2C and B2B invoices?

B2C Invoices 

Business-to-Customer (B2C) transactions are those in which supplies are provided to unregistered individuals or consumers. QR codes must be included with the basic invoice and taxpayer information in simplified e-invoices for B2C transactions.

B2B Invoices 

Saudi Arabia is one of the most recent nations to adopt B2B e-invoicing.

A QR code is optional for electronic invoices sent in Phase-1 for B2B transactions. But beginning with Phase 2, B2B invoices will also need to use a QR code. In other words, in Phase 2, it is mandatory in KSA to use a QR code with B2B invoices. The taxpayer's solutions shall generate the QR code, and the e-Invoicing Integration Portal will update it during the clearance procedure. The taxpayer must print the QR code on the human-readable invoice.

What data needs to be encoded in the QR code?

The data that needs to be encoded in a QR code depends on the type of invoice being created. 

If you are creating a B2B invoice, your QR should contain the following data:

  • Name of the seller
  • Sellers’ VAT registration number
  • Timestamp pertaining to the e-invoice or credit/debit note (the date and time should both be there)
  • The total amount to be invoiced (with VAT)
  • VAT total
  • ​Hash of XML e-Invoice. You can also add the Hash of the credit/debit note (this has to be implemented from Phase 2)
  • The cryptographic stamp that has been generated by your e-Invoice solution (this has to be implemented from Phase 2)
  • Public key pertaining to the e-invoice generating solution that has been used while generating the cryptographic stamp
  • The cryptographic stamp issued by the ZATCA portal to verify the public key of the e-invoice solution

If you are making B2C invoices, the QR code should contain the following data: 

  • Name of the seller
  • Seller’s VAT registration number 
  • Timestamp pertaining to the e-invoice or credit/debit note (the date and time should both be there)
  • Electronic invoice or credit/debit note total (with VAT)
  • VAT amount
  • Hash of XML e-Invoice. You can also add the Hash of the credit/debit note 
  • Cryptographic stamps that ZATCA’s platform has generated to verify integrated tax invoices along with their associated credit/debit notes
  • Public key of the ZATCA platform

How to generate a QR code for invoices?

All forms of e-invoices must be generated with QR codes by the vendors' e-invoicing system. Therefore, QR codes are not provided by ZATCA; they are electronically created automatically by e-invoice solutions. The transaction data contained in the Tag-Length-Value (TLV) format is transformed using the base 64 algorithms to create the QR code. ZATCA offers tools for QR code validation alone. Hence, the ZATCA-complaint e-invoicing software in Saud Arabia should be capable of generating invoices with QR codes.