The Zakat, Tax and Customs Authority (ZATCA) of Saudi Arabia has implemented an Electronic Invoicing (E-Invoicing) system to enhance tax compliance and streamline business operations. This system is being rolled out in two main phases:
Phase One: Generation Phase
- Start Date: December 4, 2021
- Requirements:
- Businesses must issue electronic invoices using compliant software, replacing traditional paper invoices.
- Invoices should be in a structured format, such as XML or PDF/A-3 with embedded XML.
- Integration with ZATCA’s platform is not required in this phase, but invoices must meet specified compliance standards.
Phase Two: Integration Phase
- Start Date: January 1, 2023
- Requirements:
- Businesses are required to integrate their E-Invoicing systems with ZATCA’s platform, known as “Fatoora.”
- Invoices must be issued in a specific format and include additional fields as mandated by ZATCA.
- This phase is being implemented in waves, targeting different groups of taxpayers based on their annual revenues.
Wave-Based Implementation Schedule
ZATCA has adopted a wave-based approach for the Integration Phase, notifying targeted taxpayers at least six months before their integration deadlines. Below is a summary of the waves and their respective criteria:
| Wave | Revenue Threshold (SAR) | Integration Deadline |
|---|---|---|
| 9-1 | > 30 million | Deadline Passed |
| 10 | > 25 million | December 31, 2024 |
| 11 | > 15 million | January 31, 2025 |
| 12 | > 10 million | February 28, 2025 |
| 13 | > 7 million | March 31, 2025 |
| 14 | > 5 million | April 30, 2025 |
| 15 | > 4 million | May 31, 2025 |
| 16 | > 3 million | June 30, 2025 |
| 17 | > 2.5 million | July 31, 2025 |
| 18 | > 2 million | August 31, 2025 |
| 19 | > 1.75 million | September 30, 2025 |
| 20 | > 1.5 million | October 31, 2025 |
Note: The revenue thresholds are based on revenues subject to VAT during 2022 or 2023.
Action Steps for Businesses
To comply with ZATCA’s E-Invoicing requirements, businesses should:
- Assess Revenue: Determine your annual revenue to identify which wave you fall under and your corresponding integration deadline.
- Upgrade Systems: Ensure your invoicing software is capable of generating compliant electronic invoices and can integrate with ZATCA’s “Fatoora” platform.
- Staff Training: Educate your accounting and IT personnel on the new E-Invoicing requirements and system functionalities.
- Testing: Conduct thorough testing of your E-Invoicing system to ensure seamless integration and compliance before the mandated deadline.
- Stay Informed: Regularly check for updates from ZATCA to remain compliant with any new guidelines or changes.
For more detailed information, you can refer to ZATCA’s official announcements and guidelines on their E-Invoicing page.
By proactively preparing for these deadlines and requirements, your business can ensure compliance with Saudi Arabia’s E-Invoicing regulations, thereby avoiding potential penalties and contributing to a more efficient tax system.