Saudi Arabia’s latest electronic invoicing announcement

Saudi Arabia’s existing mandates - Phase 1

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In December 2020, Saudi Arabia’s tax authority (Zakat, Tax and Customs Authority - ZATCA) announced new electronic invoicing regulations via a two phase approach.

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The first phase, called the “Generation Phase”, stated that businesses must be able to issue and receive electronic invoices by December 2021. From December 2021, businesses were not able to use manual invoices and could only use a compatible e-invoicing system that had the ability to store and archive all invoices.

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Existing and new mandates - Phase 2

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The second phase of Saudi Arabia’s regulations, known as the “Integration Phase”, launched on the 1st of January 2023 in a staggered approach. Within this phase, businesses must integrate their compatible e-invoicing system to ZATCA’s platform FATOORA, using ZATCA’s own API. This particular phase has several waves in itself, all based on the company’s 2021 or 2022 taxable turnover:

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• Wave 1 - January 2023 to June 2023 - Exceeding 3 billion SAR (approximately 800 million USD) in 2021
• Wave 2 - July 2023 to December 2023 - Exceeding 0.5 billion SAR in 2021
• Wave 3 - October 2023 to January 2024 - Exceeding 250 million SAR (for years 2021 or 2022)
• Wave 4 - November 2023 to February 2024 - Exceeding 150 million SAR (for years 2021 or 2022)
• Wave 5 - December 2023 to March 2024 - Exceeding 100 million SAR (for years 2021 or 2022)

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Within Saudi Arabia’s regulations, all tax invoices are part of the clearance model, meaning the invoice must be cleared before it can be submitted to the end recipient. Within this phase, businesses must only generate electronic invoices in an XML or PDF/A-3 format.

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