January 3, 2023
Saudi Arabia announces second wave of Phase 2 e-invoicing integration
On 23 December 2022, the Saudi Arabia ZATCA announced on its website that taxpayers who are resident in Saudi Arabia and have taxable turnover above SAR500m up to SAR3b during the calendar year 2021, will fall within the second wave of Phase 2 e-invoicing integration and should comply with the Phase 2 requirements. The ZATCA will notify impacted taxpayers in preparation for linking and integrating their e-invoicing systems with the ZATCA's e-invoicing platform (Fatoora).
Further, the ZATCA Governor has issued Administrative Decision No. (33551) dated 27/05/1444 Hijri which mentions that the second wave of impacted taxpayers should comply with the Phase 2 e-invoicing requirements starting from 1 July 2023 through 31 December 2023, at the latest.
On 4 December 2020, the ZATCA introduced e-invoicing in Saudi Arabia through the release of the E-Invoicing Regulation. E-invoicing in Saudi Arabia is being implemented in two phases:
Overview of the ZATCA announcement
Based on the latest announcements, ZATCA will commence notifying the relevant taxpayers who fall within the second wave of Phase 2 e-invoicing integration, to go-live between the period 1 July 2023 to 31 December 2023.
The ZATCA will issue details of the integration timelines for taxpayers who do not fall within the first or second wave of Phase 2 e-invoicing integration, in due course.
Resident businesses should comply with the obligations of Phase 2 e-invoicing integration based on the notification received from the ZATCA and undertake the relevant steps in making the required changes in their IT systems. Taxpayers should be compliant with the Phase 2 requirements in line with the e-invoicing regulation to preclude possible penalties.
For additional information with respect to this Alert, please contact the following:
EY Consulting LLC, Dubai
Ernst & Young Professional Services (Professional LLC), Riyadh
Ernst & Young Professional Services (Professional LLC), Jeddah
Ernst & Young Professional Services (Professional LLC), Al Khobar
Ernst & Young — Middle East, Bahrain
Ernst & Young LLP (United States), Middle East Tax Desk, New York