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Mandatory e-Invoicing in the Kingdom of Saudi Arabia

KSA became part of the e‑Invoicing Revolution

- What does it mean, exactly?

The e-invoicing process called FATOORA applies to taxable persons who are residents in the Kingdom of Saudi Arabia, as well as to the customers or any third parties who issue a tax invoice on behalf of a taxable person who is a resident in the Kingdom according to the VAT Implementing Regulation.

The first phase of mandatory electronic invoicing was implemented on December 4, 2021, when the obligation was imposed on companies to issue invoices and simplified invoices (used in B2C relations) in electronic form. The aim of the second phase, which started on January 1, 2023, was integration, enabling the sending of e-invoices. Its completion is planned for 2024.

Who is obliged to use e-invoicing

E-invoicing Timeline - Implemented Changes

E-invoicing changes recently implemented in Saudi Arabia:

  • As of January 1, 2023, the first wave companies that are obliged to connect to ZATCA are those based on the revenue subject to VAT for 2021 exceeding (3 billion) SAR
  • As of July 1, 2023, taxpayers obliged to connect to ZATCA have revenues subject to VAT surpassing SAR 0.5 billion
  • As of October 1, 2023, taxpayers obliged to integrate their e-Invoicing systems with the FATOORA platform are those with VATable income exceeding 250 million Saudi Rials

Who is obliged to use e-invoicing

E-invoicing Timeline - Upcoming Changes

E-invoicing changes planned in Saudi Arabia in the upcoming weeks:

  • As of November 1, 2023, taxpayers obliged to integrate their e-Invoicing systems with the FATOORA platform are those with VATable income exceeding 150 million Saudi Rials
  • As of December 1, 2023, taxpayers obliged to integrate their e-Invoicing systems with the FATOORA platform are those with VATable income exceeding 100 million Saudi Rials
  • As of January 1, 2024, taxpayers obliged to integrate their e-Invoicing systems with the FATOORA platform are those with VATable income exceeding 70 million Saudi Rials
  • As of February 1, 2024, taxpayers obliged to integrate their e-Invoicing systems with the FATOORA platform are those with VATable income exceeding 50 million Saudi Rials
  • As of March 1, 2024, taxpayers obliged to integrate their e-Invoicing systems with the FATOORA platform are those with VATable income exceeding 40 million Saudi Rials
  • Remaining phases are to be announced

Who is obliged to use e-Invoicing

Who is obliged to use e-Invoicing in Saudi Arabia

All taxable persons (excluding non-resident taxpayers) and third parties issuing tax invoices on behalf of a taxpayer that is subject to VAT are obliged to send e-Invoices.

E-invoicing process description

E-invoicing generation phase
  • No e-invoicing format was required, as long as all required fields are included in invoices and notes - buyer's VAT number (if the buyer was a registered VAT payer) and QR code (which was mandatory only for simplified VAT invoices)
  • Ability to generate tax invoices and simplified tax invoices in electronic, structured format, and to store compliant e-invoices electronically
Integration phase
  • Focuses on transmission of e-invoices and its integration with ZATCA
  • Once an e-invoice is cleared by the authority, suppliers can share the invoice or associated note with the customers
  • Required electronic invoices to be generated in XML or PDF/A-3 (with embedded XML) format
  • Required unique identifier (UUID), cryptographic stamp, hash and QR codes
  • Simplified e-invoices may be shared directly with the customer while reporting of such invoices should happen within 24 hours of generation
Current phase
  • Taxpayers notified by ZATCA on the date of their integration at least six months in advance, starting from  January 1st 2023

How integrity and authenticity may be ensured?

How integrity and authenticity may be ensured?

It is required to implement security measures in the form of an electronic seal, which is created using cryptographic algorithms.

What is the required format of an e-Invoice

What is the required format of an e-Invoice

Starting with the Integration phase, the invoice must be in XML format in order to be shared with the authority using the API for clearance and reporting.

Archiving requirements for e-invoicing in Saudi Arabia

Archiving requirements for e-invoicing in Saudi Arabia

Electronic invoices may be stored in a server on-premises in the KSA or in the cloud according to the provisions in VAT Law, VAT Implementing Regulation, E-Invoicing Regulation and resolutions and all other relevant Laws in KSA.

Why is Comarch the best choice?

We have 20+ years of experience in carrying out various EDI, e-invoicing, and other document exchange projects around the world. In those years, we have successfully connected more than 130,000 entities from over 60 countries.

  • 1. Legal compliance

    Full compliance with the latest data exchange regulations and modern data transfer standards

  • 2. Digitization

    Applying new technologies and IT solutions in order to streamline workflows and automate activities and procedures

  • 3. Individual approach

    Tailor-made solutions based on processes specific to each company – own road map and a suitable pace of changes

  • 4.Security

    Highest level of security for all sensitive and important company data

    Read more about Comarch e-invoicing

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    Legal regulation changes in Saudi Arabia

    Characteristics of the e-invoicing in Saudi Arabia

    • B2B e-invoicing and simplified e-invoicing (usually used in B2C) has been mandatory since December 4th 2021.
    • The second phase (integration) starts as of January 1st 2023.

    E-invoice format and platform

    For the generation phase (December 4th 2021), there is no specific format required to generate and store the e-Invoices. Starting with the Integration phase, the invoice must be in XML format in order to be shared with the authority using the API for clearance and reporting.

    ESAL is a national platform for e-invoicing exchange in Saudi Arabia.

    E-invoicing process description

    • The first phase of implementation requires companies to be able to generate tax invoices and simplified tax invoices in electronic, structured format, and to store compliant e-invoices electronically.
    • Second, the integration phase focuses on the transmission of e-invoices. Once an e-invoice is cleared by the authority, suppliers can share the invoice or associated note with the customers.
    • Simplified e-invoices may be shared directly with the customer while reporting of such invoices should happen within 24 hours of generation.

    Integrity and authenticity

    The supplier is responsible for the accuracy of the invoices issued, and for implementing security measures and adequate controls to prevent tampering with records stored electronically. It can be done by an electronic stamp which is created via cryptographic algorithms.

    Archiving

    Persons subject to the E-Invoicing Regulation may store their electronic invoices in a server on-premises in the KSA or in the cloud as per their solution requirements and storage requirements, and according to the provisions in VAT Law, VAT Implementing Regulation, E-Invoicing Regulation and resolutions and all other relevant Laws in KSA.

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