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:

Wave

Criteria

Timeline

1

Turnover of more than SAR3b during calendar year 2021

1 January 2023 to 30 June 2023

2

Turnover of more than SAR500m up to SAR3b during calendar year 2021

1 July 2023 to 31 December 2023

3

Turnover of more than SAR250m during calendar year 2021 or 2022

1 October 2023 to 31 January 2024

4

Turnover of more than SAR150m during calendar year 2021 or 2022

1 November 2023 to 29 February 2024

5

Turnover of more than SAR100m during calendar year 2021 or 2022

1 December 2023 to 31 March 2024

6

Turnover of more than SAR70m during calendar year 2021 or 2022

1 January 2024 to 30 April 2024

7

Turnover of more than SAR50m during calendar year 2021 or 2022

1 February 2024 to 31 May 2024

8

Turnover of more than SAR40m during calendar year 2021 or 2022

1 March 2024 to 30 June 2024

9

Turnover of more than SAR30m during calendar year 2021 or 2022

1 June 2024 to 30 September 2024

10 10

Turnover of more than SAR25m during calendar year 2022 or 2023

1 October 2024 to 31 December 2024

11 11

Turnover of more than SAR15m during calendar year 2022 or 2023

1 November 2024 to 31 January 2025

12 12

Turnover of more than SAR10m during calendar year 2022 or 2023

1 December 2024 to 28 February 2025

13 13

Turnover of more than SAR7m during calendar year 2022 or 2023

1 January 2025 to 31 March 2025

14 14

Turnover of more than SAR5m during calendar year 2022 or 2023

1 February 2025 to 30 April 2025

15 15

Turnover of more than SAR4m during calendar year 2022 or 2023

1 March 2025 to 31 May 2025

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.