The first wave of ZATCA’s E-invoicing was launched on December 4th, 2021. This was an important step in Saudi Arabia’s journey to modernize their tax system. This wave was aimed at large companies with revenues above SAR 3 billion and laid the foundation for a compliant, efficient, and transparent digital invoicing system.
Target groups and objectives
Wave 1 was aimed at large businesses with strong technical and operational capabilities. It was the primary goal to move these businesses from paper-based invoices to a digital framework that would allow for the creation, storage and management of electronic invoices and other documents.
Mandatory compliance requirements
The businesses covered by this wave were required to comply with several requirements including:
- Electronic invoice generation:
- E-invoices (credit/debit notes) and related notes must be created using formats such as XML, PDF/A-3 or embedded XML.
- Invoices must include key fields such as buyer and seller details and VAT registration numbers.
- Data integrity & security:
- Store invoices securely to ensure data accuracy and accessibility for auditing.
- Traceability and control are enhanced by using unique sequential invoice numbers.
- QR code integration
- QR codes are needed on simplified invoices to capture vital data, such as invoice dates, VAT numbers and tax amounts, for easy verification.
Introduction to digital features
Wave 1 features advanced features that ensure authenticity and accessibility
- Digital signatures: Digital signatures are recommended to verify invoice validity and prevent tampering.
- QR code functionality: Instant verification of invoices is possible by ZATCA as well as customers. This promotes transparency in all business transactions.
Prepare for future integration
Businesses were encouraged to prepare their systems in anticipation of eventual compliance, even though direct integration with ZATCA Fatoora was not required during Wave 1. The foresight of this wave ensured that the subsequent waves would be smoother, with stricter requirements for interoperability.
Impact and contribution to Vision 2030
Wave 1 targeted large companies and laid the foundations for Saudi Arabia’s journey to e-invoicing. ZATCA was able to ensure the success of the initial phase by leveraging the capabilities and resources of these entities. This wave has contributed to the Kingdom Vision 2030 through a transparent, efficient and effective tax environment.
The success of Wave 1 set the stage for Wave 2. Smaller businesses and industries can now adopt electronic invoicing with confidence.