Sailing the Digital Sea: Your Comprehensive Guide to ZATCA's E-Invoicing Phase 2 and Its Implementation in Waves

Are you ready for the next phase of ZATCA's E-Invoicing? This guide covers all the essential information you need to navigate the implementation waves successfully.

Ajith Kumar M
July 10, 2023
3 min

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Before we delve into the specifics of the newly launched ZATCA E-Invoicing Phase 2, Wave 5, it's crucial to understand the overall concept of e-invoicing in Saudi Arabia and how ZATCA's regulations are shaping the financial landscape of the country.

For those who are new to this topic or need a refresher, we've got you covered. We've previously published an in-depth article titled "E-Invoicing in Saudi Arabia: The Journey, Impact, and Tradeoffs". This article provides a comprehensive analysis of e-invoicing under ZATCA's regulations and its implications for businesses in Saudi Arabia. We highly recommend reading it for a detailed understanding of the topic. You can access the blog post Click here.

E-Invoicing (Fatoorah) Implementation in KSA

The Zakat, Tax and Customs Authority (ZATCA) has published e-invoicing requirements that will be rolled out into two main phases in Saudi Arabia:

  • Phase 1 (Generation Phase): This phase, which was enforced on December 4, 2021, requires taxpayers to generate and store tax invoices and notes through electronic solutions compliant with Phase 1 requirements.
  • Phase 2 (Integration Phase): This phase, which is being rolled out in waves, will involve the introduction of Phase 2 technical and business requirements for electronic invoices and electronic solutions, and the integration of these electronic solutions with ZATCA's systems.

Here are the complete details of the five waves of e-invoicing in KSA:

  • Wave 1: Taxpayers with more than SAR 3 billion in annual turnover were required to integrate their systems from January 1, 2023 to June 30, 2023
  • Wave 2: Taxpayers with more than SAR 0.5 billion in annual turnover were required to integrate their systems by July 1, 2023 to December 31, 2023
  • Wave 3: Taxpayers with more than SAR 250 million in annual turnover were required to integrate their systems from October 1, 2023 to January 31, 2024
  • Wave 4: Taxpayers with more than SAR 150 million in annual turnover were required to integrate their systems from November 1, 2023 to Feb 29, 2024
  • Wave 5: Taxpayers with more than SAR 100 million in annual turnover were required to integrate their systems by December 1, 2023 to March 31, 2024

The ZATCA has not yet announced the dates for the remaining waves, but they are expected to be rolled out in the coming months.

Several key factors impact the roll-out of e-invoicing in KSA, including:

  • The size and complexity of the economy: KSA is a large and complex economy, with a diverse range of businesses. This means that the roll-out of e-invoicing needs to be carefully planned and executed to be successful.
  • The level of technological adoption: The level of technological adoption in KSA is relatively high. This means that businesses are generally well-equipped to adopt e-invoicing. However, there are still some businesses that may need additional support to comply with the requirements.
  • The cost of implementation: The cost of implementing e-invoicing can vary depending on the size and complexity of the business. However, the overall cost is generally considered to be relatively low.

The roll-out of e-invoicing in KSA has several potential benefits, including:

  • Increased efficiency: E-invoicing can help to streamline business processes and reduce the time and cost of processing invoices.
  • Improved compliance: E-invoicing can help to improve compliance with tax laws by providing a more secure and transparent way to track and verify transactions.
  • Enhanced data analytics: E-invoicing can help businesses to improve their data analytics capabilities by providing a more comprehensive and accurate record of their transactions.

The roll-out of e-invoicing in KSA is a complex and challenging undertaking. However, the potential benefits are significant, and the government is committed to making the transition a success.

I hope this helps! Let me know if you have any other questions.

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We look forward to your participation and helping you navigate the world of ZATCA invoicing with ease! ✨