May 30, 2023
Saudi Arabia announces fifth wave of Phase 2 e-invoicing integration
On 26 May 2023, the Saudi Arabia Zakat, Tax and Customs Authority (ZATCA) announced on its website that taxpayers resident in Saudi Arabia that have a taxable turnover exceeding SAR100m during calendar year 2021 or 2022 will fall within the fifth wave of Phase 2 e-invoicing integration and should comply with the Phase 2 requirements. The ZATCA will notify affected taxpayers so they can begin linking and integrating their electronic invoicing systems with the ZATCA's e-invoicing platform (Fatoora).
Further, the ZATCA Governor has issued Decision No. (63692) dated 10/25/1444 AH, which was published in the Official Gazette on 26 May 2023 and mentions that the fifth wave of affected taxpayers should comply with the Phase 2 e-invoicing requirements between 1 December 2023 and 31 March 2024.
On 4 December 2020, the ZATCA introduced e-invoicing in Saudi Arabia, releasing the E-Invoicing Regulation. E-invoicing in Saudi Arabia is being implemented in two phases:
*See Tax Alert 2022-5611.
**See Tax Alert 2022-6263.
***See Tax Alert 2023-5357.
****See Tax Alert 2023-0793.
The ZATCA has already notified resident businesses falling under the above waves to remind them of their obligation to comply with Phase 2 e-invoicing within their applicable timelines.
Based on the latest announcements, the ZATCA will begin notifying taxpayers who fall within the fifth wave of Phase 2 e-invoicing integration to go live between 1 December 2023 and 31 March 2024.
Resident businesses should comply with the obligations of Phase 2 e-invoicing integration based on the ZATCA notification they received 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 the possible imposition of penalties.
Taxpayers that do not fall within the first five waves of Phase 2 e-invoicing integration should monitor future announcements from the ZATCA to learn when the integration timeline period applicable to them arises as part of subsequent waves.
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
Ernst & Young LLP (United States), Middle East Tax Desk, New York
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor