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Saudi Arabia Determines Criteria for Fifth Wave of the Integration Phase for the Country's New E-Invoicing Requirements — Orbitax Tax News & Alerts

The Saudi Zakat, Tax, and Customs Authority (ZATCA) announced on 26 May 2023 that it has determined the criteria for the fifth wave of the integration phase for the country's new E-Invoicing (FATOORA) requirements. The Integration phase is being rolled out in waves for targeted taxpayer groups and involves the introduction of technical and business requirements for electronic invoices and electronic solutions, as well as the integration of these electronic solutions with ZATCA's systems. The first wave of the integration phase began on 1 January 2023 for taxpayers with VAT taxable revenue that exceeded SAR 3 billion in 2021, and it has already been decided that:

  • the second wave will begin on 1 July 2023 for taxpayers with VAT taxable revenue that exceeded SAR 500 million in 2021;
  • the third wave will begin on 1 October 2023 for taxpayers with VAT taxable revenue that exceeded SAR 250 million in 2021 or 2022; and
  • the fourth wave will begin on 1 November 2023 for taxpayers with VAT taxable revenue that exceeded SAR 150 million in 2021 or 2022.

It has now been decided that the fifth wave will begin on 1 December 2023 for taxpayers with VAT taxable revenue that exceeded SAR 100 million in 2021 or 2022.


ZATCA Determines the Criteria for Selecting the Taxpayers in Wave 5 for Implementing (Integration Phase) of E-invoicing

Zakat, Tax and Customs Authority (ZATCA) determined the criteria for selecting the targeted taxpayers in the fifth wave for implementing the "Integration Phase" of e-invoicing, as it clarified that the fifth wave included all taxpayers whose revenues subject to VAT exceeded (100 million Saudi Riyals) during 2021 or 2022. VAT-registered taxpayers meeting the criteria should integrate their e-invoicing solutions with (FATOORA) Platform starting from 1 December 2023.

ZATCA has stated that Phase Two (Integration Phase) requires additional requirements, the most prominent of which are to integrate taxpayers' e-invoicing solutions with ZATCA's platform (FATOORA), issue e-invoices based on a specific format, and include additional fields in the invoice. Furthermore, Phase Two (the Integration Phase) of E-invoicing would take place gradually in waves, and ZATCA would inform the following waves directly at least six months before their Integration Date.

ZATCA has noted that the launch of Phase Two (the integration phase) is part of the economic development and digital transformation taking place in the Kingdom and is a continuation of the success story that began with Phase One of the implementation of e-invoicing, which achieved positive results, most notably raising the level of consumer protection in the Kingdom. On the other hand, praising the great awareness of taxpayers and the rapidity of the response in the implementation of Phase 1 (the Generation Phase).

It is worth mentioning that Phase 1 (Generation Phase) of E-invoicing, was introduced on 4 December 2021, which obliges taxpayers subject to the E-invoicing regulation to stop generating handwritten invoices or computer generated invoices through text editing software and make sure that there is a technical solution for E-invoicing that is compatible with the requirements. In addition to generating and storing e-invoices with the required fields, including the QR code and other requirements.