saudiarabia ZATCA implementation step by step configuration phase1
Here is a step-by-step solution for ZATCA Phase 1 (E-Invoicing) implementation in Microsoft Dynamics 365 Finance and Operations (F&O) for companies operating in Saudi Arabia.
✅ Objective
Comply with ZATCA Phase 1 - Generation Phase requirements, which mandate electronic invoicing and specific data formats for taxable entities in Saudi Arabia.
✅ Prerequisites
Dynamics 365 Finance environment (version 10.0.17 or later)
Saudi Arabia localization enabled
Tax registration number (TRN) configured
Azure AD user with necessary privileges
LCS access for Regulatory Configuration Services (RCS)
🔧 Phase 1: Configuration Steps in Dynamics 365 F&O
1. Enable Saudi Arabia Localization
Go to Legal entities > Legal entity > Address and ensure country/region = SA (Saudi Arabia).
Ensure the Tax registration number (TRN) is filled in for VAT.
2. Install Electronic Invoicing Add-ins
Go to LCS > Project > Asset Library > Electronic Reporting configurations.
Import the following:
E-Invoice (SA) model
E-Invoice model mapping
Sales invoice (SA) format
Credit note (SA) format
You can also use RCS (Regulatory Configuration Services) to import these configurations.
3. Set Up Electronic Reporting (ER)
Navigate to Organization administration > Electronic reporting > Configuration providers.
Set Microsoft or your own organization as the active provider.
Go to Electronic reporting > Reporting configurations to import formats listed above.
4. Configure E-Invoice Parameters
Go to Accounts receivable > Setup > E-Invoicing > E-Invoice parameters (SA)
Set:
E-Invoice format = Sales invoice (SA)
Default model mapping = E-Invoice model mapping
Enable QR Code, UUID, and hashing if required.
5. Set Up QR Code (Optional for Phase 1, but recommended)
Add a QR code control to the invoice print format.
QR data should follow ZATCA format (Seller name, TRN, timestamp, invoice total, VAT amount in base64 TLV format).
6. Document Hashing (Recommended)
Ensure invoice hash is included in the layout.
Some ER formats already include this as a calculated field.
7. Test the ER Format
Go to Accounts receivable > Invoices > All free text invoices
Create a new invoice and post it.
Click Print > Use ER format
Select Sales invoice (SA) format.
Check:
XML output matches ZATCA Phase 1 structure.
QR code and hash values are visible if enabled.
8. Training & Change Management
Train your users on:
Posting invoices electronically
Validating ER outputs
Ensuring all invoices include necessary ZATCA fields
📄 Outputs Required by ZATCA Phase 1:
Electronic XML invoice (not mandatory to send to ZATCA yet)
QR Code on simplified invoices
Digital invoice archive
📌 Notes:
Phase 1 does not require integration with ZATCA’s platform.
You only need to generate the invoice in ZATCA-compliant format.
All ER configurations can be updated later for Phase 2 - Integration Phase.
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