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Executive summary
On 29 March 2024, the Saudi ArabiaZakat, Tax and Customs Authority(ZATCA) announced on itswebsitethat taxpayers resident in Saudi Arabia with a taxable turnover exceeding 25m Saudi Riyal (SAR25m) during calendar year 2022 or 2023 will fall within the 10th wave of Phase 2 e-invoicing integration and should comply with the Phase 2 requirements. The ZATCA will notify the impacted taxpayers in preparation for linking and integrating their electronic invoicing systems with the ZATCA's e-invoicing platform (Fatoora).
Further, the ZATCA Governor has issuedDecision No. (308-99-1445) dated 11/09/1445 AH, which was published in theOfficial Gazetteon 29 March 2024, and mentions that the taxpayers coming under the 10th wave should comply with the Phase 2 e-invoicing requirements between 1 October 2024 and 31 December 2024, inclusive of both dates.
Detailed discussion
Background
On 4 December 2020, the ZATCA introduced e-invoicing in Saudi Arabia, releasing theE-Invoicing Regulation. E-invoicing in Saudi Arabia is being implemented in two phases:
- Phase 1, effective from 4 December 2021, mandates generation of e-invoices and e-notes, including related processing and record keeping.
- Phase 2, effective from 1 January 2023, mandates integration of a taxpayer's system with the ZATCA, along with the transmission of e-invoices and e-notes to the ZATCA. This phase is being implemented in waves. The criteria and timelines for the first nine waves, which were previously announced, are:
Wave | Criteria | Timeline |
11 | Turnover of more than SAR3b during calendar year 2021 | 1 January 2023 to 30 June 2023 |
22 | Turnover of more than SAR500m up to SAR3b during calendar year 2021 | 1 July 2023 to 31 December 2023 |
33 | Turnover of more than SAR250m during calendar year 2021 or 2022 | 1 October 2023 to 31 January 2024 |
44 | Turnover of more than SAR150m during calendar year 2021 or 2022 | 1 November 2023 to 29 February 2024 |
55 | Turnover of more than SAR100m during calendar year 2021 or 2022 | 1 December 2023 to 31 March 2024 |
66 | Turnover of more than SAR70m during calendar year 2021 or 2022 | 1 January 2024 to 30 April 2024 |
77 | Turnover of more than SAR50m during calendar year 2021 or 2022 | 1 February 2024 to 31 May 2024 |
88 | Turnover of more than SAR40m during calendar year 2021 or 2022 | 1 March 2024 to 30 June 2024 |
99 | Turnover of more than SAR30m during calendar year 2021 or 2022 | 1 June 2024 to 30 September 2024 |
The ZATCA has already notified resident businesses falling under the above waves to comply with Phase 2 of e-invoicing as per their applicable timelines.
ZATCA announcement
Based on the latest announcements, the ZATCA will begin notifying taxpayers who fall within the 10th wave of Phase 2 e-invoicing integration to go live within the period between 1 October 2024 and 31 December 2024, inclusive of both dates.
Implications
Resident businesses should comply with the obligations of Phase 2 e-invoicing integration based on the ZATCA notification and undertake the relevant steps in making the required changes in their information technology systems. Taxpayers should comply with the Phase 2 requirements in line with the e-invoicing regulation to preclude possible penalties.
Taxpayers who do not fall within the first 10 waves of Phase 2 e-invoicing integration should monitor future announcements from the ZATCA on the integration timeline period applicable to them in subsequent waves.
Contact Information
For additional information concerning this Alert, please contact:
EY Consulting LLC, Dubai
- Aamer Bhatti, MENA Indirect Tax Leader
Ernst & Young Professional Services (Professional LLC), Riyadh
- Mohammed Bilal Akram, Indirect Tax
- Peter Dylewski, Indirect Tax
Ernst & Young Professional Services (Professional LLC), Jeddah
- Adrian Smith, Indirect Tax
- Mohsin Rehmani, Indirect Tax
Ernst & Young Professional Services (Professional LLC), Al Khobar
- Ali Almahroos, Indirect Tax
- Shane Durran, Indirect Tax
Ernst & Young LLP (United States), Middle East Tax Desk, New York
- Yuriy Melnyk
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
