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24 March 2023 Saudi Arabia announces third wave of Phase 2 e-invoicing integration
On 24 March 2023, the ZATCA announced on its website that taxpayers that are resident in Saudi Arabia and have a taxable turnover above SAR250m during the calendar year 2021 or 2022, will fall within the third 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 issued Administrative Resolution No. (54252) dated 08/28/1444 AH which mentions that the third wave impacted taxpayers should comply with the Phase 2 e-invoicing requirements starting from 1 October 2023 through 31 January 2024. 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. Phase 2 is 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 is being implemented in waves. The criteria and timelines for the first two waves, which were previously announced, are outlined below:
Resident businesses falling under the above waves have already been notified by the ZATCA to comply with Phase 2 of e-invoicing as per their applicable timelines. Based on the latest announcements, the ZATCA will commence notifying the relevant taxpayers who fall within the third wave of Phase 2 e-invoicing integration, to go-live within the period 1 October 2023 to 31 January 2024. 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 in order to preclude possible penalties. Taxpayers that do not fall within the first three waves of Phase 2 e-invoicing integration should monitor future announcements by the ZATCA to understand the integration timelines applicable to them as part of subsequent waves. Aamer Bhatti, MENA Indirect Tax Leader | aamer.bhatti@ae.ey.com Mohammed Bilal Akram, Indirect Tax | mohammedbilal.akram@sa.ey.com Peter Dylewski, Indirect Tax | peter.dylewski@sa.ey.com Ajay Garg, Indirect Tax | ajay.garg@kw.ey.com Aliasgar Hussaini, Indirect Tax | aliasgar.husaini@bh.ey.com Adrian Smith, Indirect Tax | adrian.smith2@bh.ey.com Sanjeev Fernandez, Saudi Arabia Indirect Tax Leader | sanjeev.fernandez@sa.ey.com Gavin Needham, Indirect Tax | gavin.needham@bh.ey.com Ali Almahroos, Indirect Tax | ali.almahroos@bh.ey.com Asmaa Ali | asmaa.ali1@ey.com Document ID: 2023-5357 | ||||||||||
