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December 28, 2022

Saudi Arabia announces second wave of Phase 2 e-invoicing integration

  • The Saudi Arabia Zakat, Tax and Customs Authority (ZATCA) has announced the criteria for taxpayers to be included in the second wave of Phase 2 electronic invoicing (e-invoicing) integration.

  • Taxpayers who are resident in Saudi Arabia, with taxable turnover above SAR500m up to SAR3b during the year 2021, should be compliant with the Phase 2 e-invoicing requirements starting from 1 July 2023.

Executive summary

On 23 December 2022, the Saudi Arabia ZATCA announced on its website that taxpayers who are resident in Saudi Arabia and have taxable turnover above SAR500m up to SAR3b during the calendar year 2021, will fall within the second wave of Phase 2 e-invoicing integration and should comply with the Phase 2 requirements. The ZATCA will notify impacted taxpayers in preparation for linking and integrating their e-invoicing systems with the ZATCA’s e-invoicing platform (Fatoora).

Further, the ZATCA Governor has issued Administrative Decision No. (33551) dated 27/05/1444 Hijri which mentions that the second wave of impacted taxpayers should comply with the Phase 2 e-invoicing requirements starting from 1 July 2023 through 31 December 2023, at the latest.

Detailed discussion


On 4 December 2020, the ZATCA introduced e-invoicing in Saudi Arabia through the release of the E-Invoicing Regulation. E-invoicing in Saudi Arabia is being implemented in two phases:

  • Phase 1 is effective from 4 December 2021. This phase mandates generation of e-invoices and e-notes, including provisions related to its processing, and record keeping.

    Resident businesses who have turnover of more than SAR3b for the calendar year 2021, should have already been notified by the ZATCA to comply with Phase 2 of e-invoicing between 1 January 2023 and 30 June 2023.

  • Phase 2 will be effective from 1 January 2023. This phase mandates integration of a taxpayer’s system with the ZATCA, along with transmission of e-invoices and e-notes to the ZATCA. This phase will be implemented in waves. Resident businesses with a taxable turnover of more than SAR3b in the calendar year 2021 will fall within the first wave and are required to comply with the e-invoicing Phase 2 requirements during the period from 1 January 2023 to 30 June 2023.

Overview of the ZATCA announcement

Based on the latest announcements, ZATCA will commence notifying the relevant taxpayers who fall within the second wave of Phase 2 e-invoicing integration, to go-live between the period 1 July 2023 to 31 December 2023.

The ZATCA will issue details of the integration timelines for taxpayers who do not fall within the first or second wave of Phase 2 e-invoicing integration, in due course.


Resident businesses should comply with the obligations of Phase 2 e-invoicing integration based on the notification received from the ZATCA and undertake the relevant steps in making the required changes in their IT systems. Taxpayers should be compliant with the Phase 2 requirements in line with the e-invoicing regulation to preclude possible penalties.


For additional information with respect to this Alert, please contact the following:

EY Consulting LLC, Dubai

Ernst & Young Professional Services (Professional LLC), Riyadh

Ernst & Young Professional Services (Professional LLC), Jeddah

Ernst & Young Professional Services (Professional LLC), Al Khobar

Ernst & Young — Middle East, Bahrain

  • Ali Almahroos, Indirect Taxali

Ernst & Young LLP (United States), Middle East Tax Desk, New York


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