The Zakat, Tax, and Customs Authority (ZATCA) has released the tenth round of the Phase 2 Saudi Arabia’s e-invoicing program. VAT registered companies with a turnover of more than SAR 25 million by 2022 or 2023 are included in this wave and have to connect their e-invoicing systems in conjunction with the Fatoora portal on or before October 1st, 2024..
Key Requirements for Phase 2 Compliance
ZATCA stated it is important to note that the Phase 2 introduces additional compliance measures, such as:
- Integrating e-invoicing systems with using the Fatoora platform.
- Include additional fields as mandatory invoices.
- E-invoices issued in the requested format.
The Authority makes sure that businesses have enough time to prepare by giving an initial six-month in advance of the deadline for integration.
Summary of Waves Announced Under Phase 2
The gradual implementation plan will ensure an easy transition to electronic invoicing by categorizing businesses according to their turnover
- Phase 1 businesses with turnovers greater than SAR 3 billion by 2021 are integrated with Fatoora by January 1, 2023..
- Phase 2 Tax-registered companies with revenues of between SAR 500 million to SAR 3 billion in 2021 must be complied with by July 1, 2023..
- Third Wave: businesses with revenues in the range of SAR 250 million to SAR 500 million by 2021 or 2022 will be integrated before the 1st of October, 2023..
- Phase 4 businesses with turnovers in the range of SAR 150 million to SAR 250 million by 2021 or 2022 will be integrated before the 1st of November, 2023..
- Fifth Wave: entities earning anywhere in the range of SAR 100million and SAR 150 million by 2021 or 2022 will be integrated before December 1, 2023..
- Phase 6: Businesses with turnovers between SAR 70 million and SAR 100 million by 2021 or 2022 must be integrated before January 1, 2024..
- Seventh Wave: VAT-registered businesses with turnovers of between SAR 50 million to SAR 70 million by 2021 or 2022 have to comply by February 1, 2024..
- Wave 8 businesses earning anywhere from SAR 40million and SAR 50 million by 2021 and 2022 must be integrated before March 1, 2024..
- Wave 9 Businesses with turnovers ranging in the range of SAR 30,000,000 and SAR 40 million by 2021 or 2022 must be integrated before June 1, 2024..
- Wave 10: Businesses with turnovers greater than SAR 25 million by 2022-2023 are required to be compliant by October 1, 2024..
Success of Phase 1 and Outlook for Phase 2
ZATCA stated that the first phase of e-invoicing, which was implemented the day of December 4 2021 has brought substantial benefits, including increased consumer protection, as well as a greater understanding of the tax payer. Phase 1 required VAT-registered companies to:
- Stop issuing handwritten invoices.
- Beware of invoices generated by the use of text editing software.
- Include QR codes as well as other information that is required on invoices.
- Adopt a ZATCA-compliant e-invoicing solution.
- Archive e-invoices, as well as the connexed Credit or Debit Notes (CDNs).
In light of these accomplishments Building on these successes, Building on these achievements, Phase 2 was designed to further enhance the digital transformation of Saudi Arabia and help the economic growth of Saudi Arabia. ZATCA sees Phase 2 as a continuation of the achievements made in Generation Phase (Phase 1) which is further aligned with the objectives in Vision 2030.
Through the implementation of a planned strategy and staggered waves, ZATCA ensures that businesses are given the time and resources to implement the new e-invoicing standards easily and brace for wave 11.
