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ZATCA has revealed the 14th wave of phase 2 of Saudi Arabia’s initiative to e-invoice. VAT registered businesses with an annual turnover of more than SAR 5 million by 2022 or 2023 fall under Wave 14. Businesses must incorporate their e-invoicing system with the Fatoora platform before February 1st 2025.

Key Requirements Under Phase 2

ZATCA’s Phase 2 is comprised of several crucial updates, which include:

  • Integration of e-invoicing systems in conjunction with the Fatoora platform.
  • The inclusion of additional fields in electronic invoices.
  • Conformity to ZATCA’s standard e-invoice format.

ZATCA announces the inclusion of companies in the next wave at least 6 months prior to the date of integration.

Overview of Announced Waves Under Phase 2

  1. Wave 1 :  Companies with over SAR 3 billion turnover by 2021 should integrate by the 1st of January 2023.
  2. Wave 2: Business with a turnover from SAR 500 million to SAR 3 in 2021 should integrate 1st of July 2023.
  3. Wave 3: Turnover between SAR 250 million and SAR 500 million by 2021 and 2022 should integrate before October 1, 2023.
  4. Wave 4: The turnover will be in the range of SAR 150million and SAR 250 million by 2021 and 2022. Should integrate before November 1, 2023.
  5. Wave 5: The turnover will be in the range of SAR 100million and SAR 150 million by 2021 or 2022. These businesses should integrate by December 1, 2023.
  6. Wave 6: The turnover for Taxpayers under KSA VAT is from SAR 70 millions to SAR 100 million for 2021 or 2022. They should integrate by January 1, 2024.
  7. Wave 7: The turnover will be from SAR 50million as well as SAR 70 million by 2021 or 2022 for KSA VAT-registered businesses in KSA. These should integrate before February 1, 2024.
  8. Wave 8: Turnover for taxpayers registered under KSA VAT should be more than SAR 40million and less than SAR 50 million by 2021 or 2022. They must integrate before March 1st, 2024.
  9. Wave 9: VAT registered businesses with a turnover between SAR 30 and SAR 40 million by 2021 and 2022 should integrate by June 1, 2024.
  10. Wave 10 10: Turnover of KSA VAT registered taxpayers should be between SAR 25 millions to SAR 30 million by 2022 or 2023 and they should integrate by June 1, 2024.
  11. Wave 11: KSA VAT registered taxpayers must have turnover in the range of SAR 15 million to SAR 25 million by 2022 and 2023 and should integrate before June 1, 2024.
  12. Wave 12: The turnover of KSA VAT registered taxpayers should be in the range of SAR 10 million to SAR 15.  They must integrate before December 1, 2024.
  13. Wave 13: KSA VAT-registered taxpayers must have a turnover of SAR 7–10 million. They must integrate before January 1, 2025.

Impact of E-Invoicing on Saudi Arabia’s Economy

Phase 2 is a major advancement towards technological transformation as well as economic development. It builds upon the success of Phase 1 that has been in force from December 4 2021. Phase 1 required VAT-registered companies to:

  • Eliminate invoices that are handwritten or text-edited.
  • Adopt ZATCA-compliant e-invoicing solutions.
  • Include QR codes as well as additional fields for data in invoices.
  • Securely store e-invoices, debit or credit note securely.

The introduction of Phase 1 improved consumer protection and improved taxpayer awareness. It is creating the foundation for the success of Wave 15.