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As part of Phase 2 of e-invoicing software saudi arabia initiative, ZATCA (Zakat, Tax, and Customs Authority) has officially launched Saudi Arabia e-Invoicing Wave 19. This announcement is another major milestone towards Saudi Arabia’s journey to becoming a more digital economy, which will improve efficiency and compliance across sectors. The new regulations require businesses to keep up to date with the latest rules around real time, electronic invoicing.
If you are in E-invoicing in Riyadh or elsewhere in the kingdom, it is important to know what’s new in e-invoicing software Saudi Arabia. Under Phase 2 of e-invoicing software saudi arabia, wave 19 introduces new mandates that businesses need to comply with ZATCA framework. For businesses, this transition from paper to e-invoicing processes means they need to automate invoicing processes and select the best e-invoicing software in Saudi Arabia to ensure their systems are ready for this change to run smoothly and avoid penalties.
In Phase 2 of Saudi Arabia e-Invoicing, ZATCA has added more requirements for businesses to be entirely compliant with the new regulations. Essential updates for businesses to be aware of are these:
To be completely integrated with the Fatoora portal, businesses have to make sure that their e-invoicing software in Saudi Arabia is fully integrated with the Fatoora portal. This integration will facilitate real time submission of invoices to ZATCA for validation and processing.
In Phase 2, it is mandated that businesses include new fields in their invoices. In addition to these fields, tax identification numbers must be reported accurately so that ZATCA’s updated invoicing standards can be met.
From now on, all e invoices must be in ZATCA format. In order for businesses to accept their documents by the ZATCA system, they have to adopt this format for both the standard and simplified invoices.
According to ZATCA, businesses subjected to Phase 2 of Saudi Arabia e-Invoicing will be notified at least six months ahead of the implementation. This allows businesses to prepare adequately for the integration and avoid any compliance issues.
These points cover the critical requirements under Phase 2, and provide businesses with a clear path to keep up with the curve on Saudi Arabia e-Invoicing.
As a result, ZATCA has announced the following waves till now.
In 2021, businesses in Saudi Arabia, which are registered under VAT, with a turnover of more than SAR 3 billion, were obligated to integrate with the Fatoora portal as of 1st January 2023. It established the pattern for the wider take up of e-invoicing.
From 1st July 2023, Saudi VAT registered businesses with a turnover of SAR 500 million to SAR 3 billion in 2021 were required to integrate with Fatoora. It was this wave that brought a lot of mid-sized companies into the e-invoicing framework.
From 1st October 2023, businesses whose turnover is between SAR 250 million and SAR 500 million in 2021 or 2022 were supposed to integrate with the Fatoora portal. The wave of this wave is small to medium enterprises accelerating Saudi Arabia e-Invoicing adoption.
From 1st November 2023, VAT registered businesses in Saudi Arabia with a turnover between SAR 150 million and SAR 250 million in 2021 or 2022 are required to integrate with the Fatoora portal. It makes more regional companies come into compliance.
From 1st December 2023, businesses with VAT registration and turnover between SAR 100 million and SAR 150 million in 2021 or 2022 will be required to integrate the Fatoora portal, which will be rolled out to further sectors gradually.
Taxpayers under KSA VAT whose turnover is between SAR 70 million and SAR 100 million in 2021 or 2022 will have to integrate with the Fatoora portal by 1st January 2024. It extends the e-invoicing system to smaller businesses.
For 2021 or 2022, VAT registered businesses with turnover between SAR 50 million and SAR 70 million are required to integrate with Fatoora from 1st February 2024. Also, the adoption of e-invoicing for small business keeps on increasing.
From 1st March 2024, businesses that have registered for VAT and have turnovers between SAR 40 million and SAR 50 million in 2021 or 2022 must integrate with the Fatoora portal, as part of the phased implementation of e-invoicing in the kingdom.
From 1st June 2024, Saudi VAT registered businesses with turnover between SAR 30 million and SAR 40 million in 2021 or 2022 will need to be integrated with the Fatoora portal. This wave expands the scope of the e-invoicing system even more.
From 1st June 2024, businesses with turnover between SAR 25 million and SAR 30 million in 2022 or 2023 will be required to integrate with the Fatoora portal.
From 1st June of 2024, VAT registered businesses with turnover of SAR 15 million and SAR 25 million in 2022 or 2023 must integrate with the Fatoora portal. The kingdom is continuing to digitize and this wave includes a larger group of businesses.
Businesses that have a VAT registration and a turnover of SAR 10 million and SAR 15 million in 2022 or 2023 must connect to the Fatoora portal from 1st December 2024. The wave includes small businesses that join the e-invoicing process.
Businesses with a turnover of SAR 7 million – SAR 10 million in 2022 or 2023 are mandated to start using Saudi Arabia e-Invoicing through the Fatoora portal by 1st January 2025. More businesses are being brought into the e-invoicing system by this wave.
Businesses that are VAT registered and have a turnover between SAR 5 million and SAR 7 million in 2022 or 2023 are required to integrate with Fatoora by 1st February 2025. It is the first time that e-invoicing compliance is being applied to smaller businesses.
Starting 1st March 2025, businesses with turnover SAR 4 million or SAR 7 million in 2022 or 2023 will have to integrate with the Fatoora portal. These businesses are pushing for broader compliance in this wave.
As of 1st April 2025, businesses with turnover of SAR 3 million in 2022 or 2023 are required to integrate with the Fatoora portal. It is part of the rollout of Saudi Arabia e-Invoicing requirements for smaller and smaller businesses.
By 31st July 2025, Saudi VAT registered businesses with turnover between SAR 2.5 million and SAR 3 million in 2022 or 2023 have to comply with e-invoicing. The wave further expands the requirements to very small businesses in the country.
Businesses that have a turnover of SAR 2 million to SAR 2.5 million in 2022 or 2023 must connect with the Fatoora portal by 31st August 2025. From the VAT registered businesses this last wave will finally complete the implementation phased of e-invoicing.
The ZATCA highlighted that Phase 2 of Saudi Arabia of e-invoicing is an important step in Saudi Arabia’s digital transformation journey. In this phase the added objective is to take technology further and integrate into business operations in a way that will drive efficiency and economic development. The idea is that it will simplify processes, make things transparent and ultimately support the kingdom’s economic ambitions more broadly.
Phase 1 of e-invoicing in Saudi Arabia was a great success in setting the groundwork for Phase 2. The initial phase raised consumer protection and led to awareness among taxpayers as it enabled the increase in tax compliance and a reduction in fraud. The positive outcomes reassured the necessity and unending roll out of e-invoicing.
From 4th December 2021 ZATCA implemented phase 1 of Saudi eInvoicing, which is the requirement for VAT registered taxpayers in Saudi to:
In order to shift from handwritten invoices to digital ones, businesses in Saudi Arabia were forced to stop issuing handwritten invoices. This was an important step to make sure that all invoices could be processed electronically for compliance.
It was prohibited to use basic text editing software to generate invoices. This had the effect of standardizing all invoices so that they could be integrated with the ZATCA approved e-invoicing solutions, eliminating inconsistencies.
Due to this, businesses were mandated to adopt ZATCA compliant eInvoicing solutions to ensure consistency and compliance. The solutions were designed to allow easy integration with the Saudi tax authority’s digital systems and to ensure that all reporting is done correctly.
The QR code had to be included in every invoice along with other necessary data like tax numbers and transaction details. It was easier for authorities to verify and authenticate invoices quickly.
All e-invoices along with related Credit or Debit Notes (CDNs) were to be securely stored by businesses. This requirement was to make sure that all transactional records were available for audit and tax reporting purposes.
Phase 1 of e-invoicing software Saudi Arabia initiative was one of important steps towards modernization of the country’s tax system, transparency, and boosting business operations. This is achieved by mandating VAT registered businesses to use digital invoicing solutions like QR codes and secure storage of invoices in Saudi Arabia. They are preparing the way for a future ready economy, both for business and the government.
The success of Phase 1 for Saudi Arabia is a strong foundation for further advancement of Saudi Arabia e-Invoicing in Phase 2. In light of these changes, businesses need to adapt to these changes, or they will not be able to compete in a digital-first world, by using ZATCA Compliant Saudi Arabia e-Invoicing software. In embracing these systems, not only will compliance be ensured, but also operational excellence in line with the nation’s digital transformation goals will be achieved.
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