Saudi Arabia Makes Electronic Invoicing Mandatory
In December 2021, Saudi Arabia made electronic invoices mandatory for all in-country taxpayers. The implementation of the electronic invoicing system began on December 4th and the Zakat, Tax and Customs Authority (ZATCA) declared it will implement it in two phases. As of January 1, 2023, taxpayers obliged to e-invoice and connect to ZATCA are those with VATable income in 2021 exceeding 3 billion Saudi Rials.
The EDICOM electronic invoicing solution is ready for phase II, the integration phase, with the ZATCA system.
Achieve ZATCA compliance from EDICOM's Global e-Invoicing Platform.
FATOORAH, Electronic invoicing in Saudi Arabia
The electronic invoicing project in Saudi Arabia is called the FATOORAH and is applicable to B2B, B2C, and B2G transactions. The project began in December 2020 when the ZATCA previously named the GAZT published the electronic invoicing regulation specifying the terms, requirements, and conditions related to the electronic invoices and their associated documents. The ZATCA published more details concerning the regulation on May 28, 2021, including, technical specifications, requirements, and the rules framing each phase of the project.
Who is obligated to use the electronic invoice in Saudi Arabia?
The new norm will apply to B2B transactions and will affect all resident taxpayers in the country. It will also affect third parties who issue invoices in the name of a taxpayer subject to VAT. Companies that do not reside in Saudi Arabia are exempted.
Phases of the FATOORAH e-invoicing project and key dates
Phase 1: December 4th, 2021
Taxpayers will have to issue electronic invoices with a compatible system that allows the required fields to be represented in the electronic invoice. The system must also archive and generate an electronic copy for the client. Manual invoices will no longer be accepted
The mandatory fields that must be included in the electronic invoice in phase 1 are the VAT number of the buyer if registered as a taxpayer mandated to invoice; the issuance date of the invoice and the VAT. Optionally issuers can add a QR code to B2B invoices but must include it on the simplified B2C invoices.
Phase 2: January 1st, 2023
This phase, called the "integration phase", will be carried out gradually. ZATCA will inform at least six months in advance of the integration date.
As of January 1, 2023, the first wave companies that are obliged to connect to ZATCA are those based on the revenue subject to VAT for the year 2021 exceeding (3 billion) SAR.
During this phase, the following requirements must be followed: all electronic invoices including tax invoices or simplified tax invoices and their associated documents must be generated in an XML or PDF/ A-3 (with XML) format.
The electronic invoicing solution must be able to connect to the internet and integrate with external systems through the ZATCA’s API.
The following security mechanisms must be implemented to guarantee the integrity of the invoices: digital signature, unique universal identifier (UUID), the generation of a hash and a QR code.
The ZATCA has defined its electronic invoicing system as well as the technical requirements for the electronic invoices. It is highly recommended to begin the transition to the new electronic invoicing system. Phase 1 enables taxpayers to begin exploring the system and establish the foundations for a solution that is compatible with the ZATCA system.
EDICOM Global e-Invoicing Solution
EDICOM is a technology provider specialized in Electronic Data Interchange and e-invoicing solutions. Currently, EDICOM operates in over 70 countries and offers electronic invoicing solutions for electronic invoicing systems around the world. EDICOM’s technical and regulatory experience enables it to rapidly and effectively implement new solutions in new countries.
EDICOM’s International Electronic Invoicing Platform for the issuance and reception of electronic invoices is adaptable to the specifications of each country where you and your partners operate and is constantly updated to ensure compliance.