May 2, 2023
Saudi Arabia announces fourth wave of Phase 2 e-invoicing integration
On 28 April 2023, the Saudi Arabia Zakat, Tax and Customs Authority (ZATCA) announced on its website that taxpayers resident in Saudi Arabia that have a taxable turnover above SAR150m during the calendar year 2021 or 2022 will fall within the fourth 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 has issued Decision No. (58897) dated 09/22/1444 AH, which was published in the Official Gazette on 28 April 2023 and mentions that the fourth wave of affected taxpayers should comply with the Phase 2 e-invoicing requirements within the period 1 November 2023 through 29 February 2024.
On 4 December 2020, the ZATCA introduced e-invoicing in Saudi Arabia, releasing the E-Invoicing Regulation. E-invoicing in Saudi Arabia is being implemented in two phases:
*See Tax Alert 2022-5611.
**See Tax Alert 2022-6263.
***See Tax Alert 2023-5357.
Resident businesses falling under the above waves have already been notified by the ZATCA to comply with Phase 2 of e-invoicing as per their applicable timelines.
Overview of the ZATCA announcement
Based on the latest announcements, the ZATCA will begin notifying taxpayers who fall within the fourth wave of Phase 2 e-invoicing integration, to go live within the period 1 November 2023 to 29 February 2024.
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 comply with the Phase 2 requirements in line with the e-invoicing regulation to preclude possible penalties.
Taxpayers that do not fall within the first four waves of Phase 2 e-invoicing integration should monitor future announcements by the ZATCA to learn when the integration timeline period applicable to them arises as part of subsequent waves.
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
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor