Saudi Arabia: e-Invoicing to become mandatory in two phases

The Saudi Arabian Tax and Customs Authority (ZATCA) is rolling out a two-phase reform of the new electronic invoicing system.

Phase one will commence on the 4th of December 2021 and the second phase will begin on January 1st, 2023.

Phase one of e-invoicing

During the first phase, e-invoicing becomes mandatory and suppliers should move away from handwritten paper invoices to electronic ones. In this phase, all registered taxpayers are to generate electronic invoices. Invoices will be stored electronically and a copy should also be sent to the buyer. During this phase, there will be minimal regulation of the invoices but suppliers should slowly start thinking of updating their systems in order to be fully compliant with phase 2 of e-invoicing.

During phase 1 the content of the electronic invoices should be compliant with the requirements of the current standard invoice format. Companies implementing e-invoicing after the 4th of December would be advised to use one of the formats that are set to become mandatory after phase 2.

Phase 2 – Integration (1 January 2023)

Also mentioned as the integration phase, in this phase, the electronic invoices would need to be issued in two regulated formats via specific e-invoicing solutions that comply with the new platform of ZATCA.

The two formats are the Saudi Arabian XML invoice and the PDF/A3 invoice. E-invoicing solutions should also follow some safety specifications such as anti-tampering features, digital signatures, and universally unique identifiers.

All e-invoices will from then on go through ZATCA’s new invoicing platform via an API integration connecting each invoicing system to the central platform.

E-invoicing is currently being adopted all across the world. This is a natural evolution of the modern economy and e-invoicing will help modernize each country’s tax infrastructure, increase control by the authorities and reduce administrative costs. Following this new worldwide trend, Saudi Arabia has also set the ground for a full modernization of its invoicing systems.