ZATCA starts 2nd, ‘Integration’ phase for mandatory e-invoice 1 January 2023
On 24 June, the Saudi Tax and Customs Authority (ZATCA), started work on the second phase of e-invoicing rollout, mandatory e-invoice integration by resident companies to its systems for pre-clearance of e-invoices, including simplified invoices, credit and debit notes. Any businesses with an annual taxable turnover above SAR 3 billion (approximately $800 million) in 2021 must now start planning with ZATCA for the first wave of the Integration phase on 1 January 2023. This follows the 4 December 2021 generation phases when taxpayers had to be capable of issuing and receiving e-invoices from other taxpayers directly.
The latest guidance for businesses above the threshold covers:
- Control requirements, business rules for validation of the xml invoices
- Technical specifications of e-invoices, certain data fields between mandatory, conditional or optional
- Procedural rules, including VAT Group number treatment and inclusion of Fields for the Purchase Order and Contract Identification Numbers
Electronic invoices test sandbox for testing prior to Jan 2023 full integration
Businesses can already test the FATOORAH e-invoice system in a sandbox environment ahead of full mandatory obligation to issue e-invoices from 1 January 2023. This follows the December 2021 introduction of the obligation to be able to receive e-invoices.
This has been provided by ZATCA.
Integration (Jan 2023) following first phase, Introduction (Dec 2021)
Saudi Arabia implemented the requirement to receive B2B electronic invoices for VAT transactions by resident businesses from 4 December 2021. Taxpayers do not yet have to submit full e-invoices (FATOORAH) to the ZATCA tax authorities in real-time until 1 January 2023. Non-resident taxable persons for VAT purposes are excluded.
This follows examples in Europe (e.g. Italy) and from around the world whereby tax authorities seek to gain transactional-level details of tax liabilities to help detect and prevent evasion. Check VAT Calc’s global live VAT invoice transaction and e-invoice reporting tracker to see where else real-time submissions of invoices is being implemented.
The Zakat Tax and Customs Authority (ZATCA) is rolingl out the new invoicing rules in two phases:
Phase 1, Issue and Storage (Generation), 4 December 2021
The covered the obligations to issue, receive and store sales and purchase e-invoices in a secure manner from e-invoicing system. The scope will include the following transactions:
- Domestic;
- Zero rated; and
- Exports
The following transactions are excluded:
- Exempt supplies
- Import of goods; and
- Supplies subject to reverse charge mechanism
Invoices will be required to contain a QR Code for B2C invoices at least. B2B will remain optional. invoices must include the mandatory fields and must be issued from an electronic system meeting ZATCA’s requirements. In addition, electronic copies of all issued invoices must be stored by the taxpayer.
ZATCA laid out the basic requirements for the Phase 1, Issue and Storage, stage. This covers the:
- Controls, requirements, technical specifications, and procedural rules to implement the provisions of the e-invoicing regulations
- e-invoice XML implementation requirements;
- security structures; and
- QR Code invoice requirement
E-invoicing systems may include: Online cash registers, virtual cash registers on tablets, e-invoicing software installed on a computer, e-invoicing software in- stalled on phone or tablet and cloud- based solutions are examples of e-invoicing solutions.
VAT Calc’s in real-time global Calculator and Auditor services produce instant and accurate tax calculations into your ERP, billing, e-commerce or e-invoicing systems. This includes Saudi Arabia, other Gulf states as the follow and the rest of the world.
Middle East & Africa e-invoicing
