December 10, 2020
Saudi Arabia introduces e-invoicing
On 4 December 2020, Saudi Arabia's General Authority of Zakat and Tax (GAZT) published regulations on the implementation of electronic invoicing (e-invoicing). Businesses have 12 months to implement relevant technology and prepare for issuance and storing of e-invoices in compliant formats.
As announced by the GAZT, the primary objectives in introducing an e-invoicing framework are to limit the shadow economy, promote fair competition and consumer protection, as well as address commercial and tax fraud.
Who is subject to the e-invoicing regulations?
Taxable persons resident in Saudi Arabia will have to issue and store e-invoices in electronic format with predefined data fields. The requirements also apply to third parties who are issuing tax invoices on behalf of resident taxable persons.
The e-invoicing rules will not apply to taxable persons who are not resident in Saudi Arabia.
What is an e-invoice?
An e-invoice is a tax invoice issued in an electronic form. Scanned or photocopied invoices are not e-invoices.
When should an e-invoice be issued?
E-invoices must be issued for all transactions for which tax invoices must be issued. Taxable persons must also issue credit notes and debit notes in an electronic format.
What are the technical requirements of an e-invoice?
The e-invoicing regulations contain preliminary requirements for the technology that enables issuance and storing of e-invoices, including:
What is the deadline for implementation of the e-invoicing rules?
Taxpayers will need to be ready to issue, receive and store e-invoices by 4 December 2021.
Saudi authorities will release further details on the e-invoicing framework within the next six months, including system and technical requirements relating to the implementation of e-invoicing by businesses.
Businesses will need to adopt digital tax accounting and reporting to meet the new compliance requirements. Businesses should start considering the steps required to implement e-invoicing.
For additional information with respect to this Alert, please contact the following:
Ernst & Young and Co (Certified Public Accountants), Riyadh
Ernst & Young and Co (Certified Public Accountants), Jeddah
Ernst & Young and Co (Certified Public Accountants), Al Khobar
EY Consulting LLC, Dubai
Ernst & Young LLP (United States), Middle East Tax Desk, New York
PDF version of this Tax Alert