Saudi Arabia announces 16th wave of Phase 2 e-invoicing integration

• Saudi Arabia's Zakat, Tax and Customs Authority has announced the criteria for taxpayers to be included in the 16th wave of Phase 2 e-invoicing integration.
• Taxpayers resident in Saudi Arabia, with a taxable turnover exceeding SAR3m during the calendar year 2022 or 2023, should comply with the Phase 2 e-invoicing requirements that are effective from 1 April 2025.

Executive summary

On 27 September 2024, Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA) announced on its website that taxpayers resident in Saudi Arabia, with a taxable turnover exceeding three million Saudi Riyal (SAR3m) during calendar year 2022 or 2023, will fall within the 16th wave of Phase 2 e-invoicing integration and should comply with the Phase 2 requirements. The ZATCA will notify the impacted taxpayers in preparation for linking and integrating their electronic invoicing systems with the ZATCA's e-invoicing platform (Fatoora).

Further, the ZATCA Governor issued Decision No. (1446-99-363) dated 19/03/1446AH, which was published in the Official Gazette on 27 September 2024, and mentions that taxpayers coming under the 16th wave should comply with the Phase 2 e-invoicing requirements between 1 April 2025 and 30 June 2025, inclusive of both dates.

Detailed discussion

Background

On 4 December 2020, the ZATCA introduced e-invoicing in Saudi Arabia, releasing the E-Invoicing Regulations. E-invoicing in Saudi Arabia is being implemented in two phases:

• Phase 1, effective from 4 December 2021, mandates the generation of e-invoices and e-notes, including related processing and record keeping.
• Phase 2, effective from 1 January 2023, mandates integration of a taxpayer's system with the ZATCA, along with the transmission of e-invoices and e-notes to the ZATCA. This phase is being implemented in waves. The criteria and timelines for the first 15 waves, which were previously announced, are:

The ZATCA has already notified resident businesses falling under the above waves to comply with Phase 2 of e-invoicing as per their applicable timelines.

ZATCA announcement

Based on the latest announcements, the ZATCA will begin notifying taxpayers who fall within the 16th wave of Phase 2 e-invoicing integration, to go live within the period between 1 April 2025 and 30 June 2025, inclusive of both dates.

Implications

Resident businesses should comply with the obligations of Phase 2 e-invoicing integration based on the ZATCA notification and undertake the relevant steps in making the required changes in their information technology systems. Taxpayers should comply with the Phase 2 requirements in line with the e-invoicing regulation to preclude possible penalties.

Taxpayers who do not fall within the first 16 waves of Phase 2 e-invoicing integration should monitor future announcements from the ZATCA on the integration timeline period applicable to them in subsequent waves.

For additional information concerning this Alert, please contact:

EY Consulting LLC, Dubai

• Aamer Bhatti, MENA Indirect Tax Leader

Ernst & Young Professional Services (Professional LLC), Riyadh

• Mohammed Bilal Akram, Indirect Tax
• Peter Dylewski, Indirect Tax
• Juan Swanepoel, Indirect Tax

Ernst & Young Professional Services (Professional LLC), Jeddah

• Adrian Smith, Indirect Tax
• Mohsin Rehmani, Indirect Tax

Ernst & Young Professional Services (Professional LLC), Al Khobar

• Ali Almahroos, Indirect Tax
• Shane Durran, Indirect Tax

Ernst & Young LLP (United States), Middle East Tax Desk, New York

• Yuriy Melnyk

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.