Saudi Arabia e-Invoices – ninth wave June 2024

FATOORAH mandatory B2B e-invoicing ninth wave to join Phase 2 from 1 June 2024

Zakat, Tax and Customs Authority (ZATCA) confirms eight wave of taxpayers to join the Phase 2 (Integration Phase) of mandatory e-invoicing. These are taxpayers with an annual income between SAR 30 million and SAR 40 million in either 2021 or 2022. They will be obliged to comply with the national FATOORAH regime from mid-2024 – although ZATCA will inform them of the exact date which will be in June 2024. Phase 1 was enacted in December 2021.

The confirmed waves so far include:

9th wave Jun 2024 – taxpayers annual income between SAR 30 million and SAR 40 million

8th wave Mar 2024 – taxpayers annual income between SAR 40 million and SAR 50 million

7th wave Feb 2024 – taxpayers annual income between SAR 50 million and SAR 70 million

6th wave Jan 2024 – taxpayers annual income between SAR 70 million and SAR 100 million

5th wave Dec 2023 – taxpayers annual income between SAR 100 million and SAR 150 million

4th wave Nov 2023 – taxpayers annual income between SAR 150 million and SAR 250 million

3rd wave Oct 2023 –  taxpayers annual income between SAR 250 million and SAR 500 million

2nd wave Jul 2023 – second wave businesses with a turnover above SAR 500m (approximately USD 13.3m). ZATCA should have already contacted the eligible businesses.

1st wave Jan 2023 – taxpayers annual turnover above SAR 3 billion,

This will require businesses to:

  • B2B XML invoices should be sent to ZATCA for prior clearance (Continuous Transaction Controls CTC) .
  • B2C invoices will instead be reported in near-live format, within 24 hours of booking. Paper invoices for customers is still permitted, although e-invoices can be offered. In either case, a QR Code is required.

The latest guidance for businesses above the threshold covers:

  • Control requirements, business rules for validation of the xml invoices
  • Technical specifications of e-invoices, certain data fields between mandatory, conditional or optional
  • Procedural rules, including VAT Group number treatment and inclusion of Fields for the Purchase Order and Contract Identification Numbers

This follows examples in Europe (e.g. Italy) and from around the world whereby tax authorities seek to gain transactional-level details of tax liabilities to help detect and prevent evasion.

Phase 1, Issue and Storage (Generation), 4 December 2021

This covered the obligations to issue, receive and store sales and purchase e-invoices in a secure manner from e-invoicing system. The scope will include the following transactions:

  • Domestic;
  • Zero rated; and
  • Exports

The following transactions are excluded:

  • Exempt supplies
  • Import of goods; and
  • Supplies subject to reverse charge mechanism

Invoices are required to contain a QR Code for B2C invoices at least. B2B will remain optional.  Invoices must include the mandatory fields and must be issued from an electronic system meeting ZATCA’s requirements. In addition, electronic copies of all issued invoices must be stored by the taxpayer.

ZATCA laid out the basic requirements for the Phase 1, Issue and Storage, stage. This covers the:

  • controls, requirements, technical specifications, and procedural rules to implement the provisions of the e-invoicing regulations
  • e-invoice XML implementation requirements;
  • security structures; and
  • QR Code invoice requirement

E-invoicing systems may include: Online cash registers, virtual cash registers on tablets, e-invoicing software installed on a computer, e-invoicing software installed on phone or tablet and cloud-based solutions are examples of e-invoicing solutions.