Phase I (Issuance and Preservation Phase) of e-Invoicing was implemented on December 4, 2021, mandating the taxpayers subject to the e-invoicing regulations to restrict the usage of handwritten invoices or invoices generated on computers through text editing or number analysis programs.
The objective behind mandating e-invoicing in the Kingdom of Saudi Arabia was to ensure that there is a technical solution for e-invoicing that complies with the requirements of ZATCA Authorities and that the invoices are sustained with all the necessary elements including QR Code.
Phase II of e-invoicing was introduced by the ZATCA Authorities as an extension to the economic renaissance and the ongoing digital transformation in the Kingdom of Saudi Arabia, and a continuation of the achievements of Phase I.
In a recent news update on the ZATCA Portal, the Zakat, Tax, and Customs Authorities have laid down the criteria for selecting target establishments in the second group for the implementation of the “linkage and integration” phase of e-Invoicing. The update states that the second group will include establishments with revenues subject to VAT exceeding half a billion riyals during 2021.
The Authority further notified the target establishments in the second group for preparing for the linking and integration of the e-Invoicing systems of these establishments with the FATOORAH Portal from July 1, 2023.
Furthermore, the ZATCA Authorities added that Phase II (the linking and integration phase) will be implemented with additional requirements, as mentioned below:
- Linking the e-Invoicing systems of taxpayers with the FATOORAH Portal
- Issuing e-Invoices based on the specified format.
- Including various additional fields and elements while generating the e-Invoices.
The e-Invoicing phase II mandate will be done gradually and in groups, and the Authority will inform the subsequent groups at least six months prior to the specified date for the linkage.
Moreover, the implementation of Phase II (connection and integration phase) for the first group will be done from January 1, 2023, for establishments. The selection criteria for the same was announced in June 2022, after those establishments completed the necessary requirements for this phase.