Königreich Saudi-Arabien

Wave 7 of Phase 2 e-invoicing The ZACTA (Zakat, Tax and Customs Authority) has defined the criteria for the seventh wave of phase 2 of the e-invoicing mandate.  From February 1, 2024, taxpayers with VAT taxable revenue over SAR 50 million for the years 2021 and 2022 must integrate their e-invoicing systems with ZATCA (FATOORA).  

Extension of the amnesty for fines and financial Penalties ZACTA (Zakat, Tax and Customs Authority) first announced the Exemption of Penalties Initiative in June 2022 to mitigate the finance implication resulting from the global pandemic, this initiative was scheduled for six months but was extended till June 2023.   ZATCA has recently confirmed another extension of the initiative, with an expiry date of December 31, 2023. As part of the initiatives, fines including late filings, late registrations, and VAT field control violations relating to e-invoicing are cancelled for all taxpayers.  A simplified guideline explaining fine exemptions can be found here. 

Wave 6 of Phase 2 e-invoicing has been announced The ZACTA (Zakat, Tax and Customs Authority) has defined the criteria for the sixth wave of phase 2 of the e-invoicing mandate.  From January 1, 2024, taxpayers with VAT taxable revenue over SAR 70 million for the years 2021 and 2022 must integrate their e-invoicing systems with ZATCA (FATOORA).  

Tax groups announced for new waves of the e-invoicing implementation In Saudi Arabia, the Integration Phase of the e-invoicing mandate is being implemented in waves starting from January 2023. Currently, taxpayers exceeding 0.5Bn Riyals (Wave 2) are required to integrate their systems with ZATCA's platform to clear invoices.  A new timeline for the upcoming waves was announced by ZATCA as follows: 

• Wave 3: 1st October 2023: taxpayers with annual revenue of 250M riyals should comply with the integration phase requirements. 
• Wave 4: 1st November 2023: taxpayers with annual revenue of 150M riyals will join the integration phase.  
• Wave 5: 1st  December 2023, taxpayers with an annual revenue of 100M riyals will join the integration phase.  

Kofax offers an e-invoice attachment service to deliver compliance e-invoicing in Saudi Arabia. With our e-invoicing platform, suppliers can attach their legal e-invoices, and we will send buyers an e-invoicing package that includes the legal e-invoice, Kofax's PDF (non-tax invoice), and the buyer file for your invoice processing. 

Additional details to be mentioned on the invoice for profit margin scheme From July 1, 2023, additional details will be required on tax invoices issued for taxable supplies based on the profit margin scheme for selling used vehicles as per ZATCA Governor's decision (Administrative Resolution No. (63630) dated 25/10/1444 AH). 

ZATCA determines criteria for wave 4 participants in the Integration Phase ZATCA has selected the participants for wave 4 regarding the e-invoicing integration phase. The fourth wave to implement the integration phase of e-invoicing will apply to all taxpayers whose VAT revenues exceed 150 Million (~39M USD) Saudi Riyals during 2021 or 2022. From 1 November 2023, taxpayers who meet the criteria should integrate their e-invoicing systems with the ZATCA FATOORA portal.

Proposed amendments to the e-invoicing rules The Saudi Zakat, Tax and Customs Authority ('ZATCA') is proposing changes to the controls, requirements, technical specifications, and procedural rules of the E-invoicing regulation.   Advance payments ('prepayments') and charges on invoices/notes have been suggested as new functionalities. Additionally, certain updates have been proposed concerning business rules and changes to obligations. The proposals were subject to a brief consultation period, which has now ended.    For more information related to the proposal, you can visit this link.    

End of the initiative of cancelling fines In our previous blog, we wrote about ZATCA's extended period for the “Cancellation of Fines and Exemption Penalties Initiative”.   Under this initiative, fines including late filings, late registrations, and VAT field control violations relating to e-invoicing are cancelled for all taxpayers.  The initiative will officially expire at the end of May 2023. The Zakat, Tax and Customs Authority (ZATCA) urges taxpayers to benefit from the Cancellation of Fines and Exemption initiative prior to its expiration date.   

Details on wave 3 taxpayers in scope of the e-invoicing mandate ZATCA has published the criteria for taxpayers who fall in the scope of wave 3 of the e-invoicing integration phase.   Taxpayers with total revenue (only revenue from transactions subject to VAT) exceeding 250 Million Saudi Riyals in 2021 and/or 2022 will fall within the scope of the Integration Phase from 1 October 2023.   Taxpayers who meet the criteria are advised to integrate their e-invoicing software with the FATOORA platform before 1 October 2023.  Detailed information on e-invoicing integration in Saudi Arabia can be found here. 

Voluntary participation in Integration Phase The Integration Phase of e-invoicing began in January 2023 for the first wave taxpayers (whose turnover exceeds 3 billion riyals annually), and ZACTA recently identified the second wave taxpayers (whose revenues exceed 500 million riyals annually); The second wave is expected to begin in July 2023. Further, ZATCA has allowed taxpayers who are not part of the first wave to participate in the Integration Phase on a voluntary basis prior to their integration date.

Go-live of Fatoora portal and end of E-invoice pilot testing phase  ZATCA (Zakat, Tax, and Customs Authority) launched its official Fatoora portal on 26 December 2022. Taxpayers can then onboard their respective production systems and integrate their E-Invoicing generation solutions.  The Fatoora portal considers invoices shared with the portal to be official tax invoices, therefore, it is important for taxpayers to assess and verify that all field level and security requirements have been met.   ZATCA has also developed a "Fatoora Simulation Portal" that serves as a replica of the production environment. Taxpayers who are not part of the first wave may use this portal for testing purposes. 

A new version of Detailed Guidelines of E-invoicing In December 2022, ZATCA released an updated version of the Detailed Guidelines On E-invoicing, which provides details on how to integrate with the Fatoora portal, failure scenarios, and frequently asked questions regarding the use of e-invoicing.  This guideline is available in English on the ZATCA website.  

ZATCA announces the second wave of taxpayers included in Phase 2 In 2021, the Kingdom of Saudi Arabia introduced e-invoicing in two phases. Phase One, the generation phase came into effect on 4 December 2021 for all taxpayers. Phase two, the integration phase, became live on 1 January 2023 for taxpayers with an annual turnover exceeding SAR 3 billion in 2021.   From 1st July 2023, taxpayers whose annual turnover in 2021 exceeded SAR 500 million will also be required to comply with the requirements of the integration phase. ZATCA will notify taxpayers falling under this scope six months in advance of the implementation date by email or SMS message.   

Extension of the penalty relief initiative for 6 months

ZATCA has extended the "Cancellation of Fines and Exemption of Penalties Initiative" for an additional six months beginning on December 1, 2022 and ending on May 31, 2023.

ZATCA has also clarified that the fines covered by the exemption decision, include fines for late registration in all tax systems, late payment, late filing of returns fines in all tax systems, fines to correct VAT returns, as well as fines for violations of VAT field control related to applying the e-invoicing regulations and other general regulations.  Note this is a general amnesty and should not be interpreted as a delay in having to comply with the requirements of the Integration Phase of the e-invoicing mandate. A simplified guideline (Arabic) published on ZATCA's website provides more information about the initiative (including examples of violations and the conditions for benefitting from the exemption from fines).

ZATCA proposed amendment on Article 33 of the VAT law Zakat, Tax and Customs Authority (ZATCA) released draft legislation proposing an addition to Article 33 of the VAT regulations, which includes a zero VAT rate for "exporting" services.   The following amendment has been proposed by ZATCA to Article 33 of the VAT Implementing Regulations:    “3- Notwithstanding the second paragraph of this article, the supply of services to a non-resident customer in any of the member states is subject to the zero rate in cases where the supply facilitates the supply of taxable services by that non-resident customer to a person in the Kingdom.”   Stakeholders and taxpayers were encouraged to share feedback on this proposal no later than 11 November 2022.   

ZATCA releases user manual for Fatoora portal user manual – Version 2 ZATCA has published a user manual for accessing the Fatoora Portal to onboard taxpayers' E-invoicing Generation Solution (EGS) units. The user manual provides information on the following:  

• Accessing Fatoora portal through the Taxpayer credentials to generate the OTP (one time password) as part of EGS onboarding process. 
• Generation of OTP for the renewal of the existing cryptographic stamp identifier (CSID).  
•  Viewing the list of onboarded solutions and devices along with option to revoke an existing EGS units.  
•  E-invoicing statistics which provides a summary of the statistics in relation to the submitted documents in the past 12 months along with their respective status.  
• API Documentation link that can be used to access the ZATCA developer portal.  

You can access the English version of the guide on the ZATCA website: https://zatca.gov.sa/en/E-Invoicing/Introduction/Guidelines/Documents/Fatoora%20portal%20user%20manual.pdf  

New e-invoicing phase 2 requirements From 1st January 2023, Saudi Arabia will require that Business-to-Business (B2B) and Business-to-Government (B2G) transactions be cleared with the Saudi government (ZATCA) before these can be sent to the buyer. Tungsten Network is committed to supporting the upcoming e-invoicing mandate in Saudi Arabia and has produced this FAQ that provides insightful information on the requirements and how they would impact your invoice processing. It also presents how Tungsten’s services can assist you in ensuring a seamless transition.

ZATCA to subsidize purchase of e-invoicing software The Kingdom of Saudi Arabia has mandated e-invoicing Phase One (Generation Phase) since 4 December 2021, and Phase Two (Integration Phase) will come into effect on 1 January 2023. When the integration phase kicks off, taxpayers will be required to exchange their invoice data with the tax authority - ZATCA. ZATCA has announced that it will offer to subsidize the purchase of e-invoicing software. In order to submit a request, taxpayers must provide certain detailed information and the invoice they received from the e-invoicing service provider. The "E-invoicing Subsidy Request" form can be accessed on the taxpayer portal.

Saudi Arabia launches tax amnesty schemes The Zakat, Tax and Customs Authority (ZATCA) announced an initiative to ease the blow of the COVID-19 outbreak on businesses by cancelling fines and exemption from financial penalties for all taxpayers, starting June 1, 2022, and ending November 30, 2022. According to the Authority, the fines covered by the exemption include fines for late registration in all tax systems, late payment, late filing of returns fines in all tax systems, and fines to correct VAT returns, as well as fines for violations of VAT field control related to applying the e-invoicing regulations and other general regulations. ZATCA encourages taxpayers to view the details of the schemes through the simplified guideline on its website and urges all taxpayers to benefit from the initiative during the allotted time.

Saudi Arabia will consider reducing VAT “ultimately” Saudi Arabia introduced VAT at a 5% rate in 2018. This was later tripled to 15% in 2020 to shore up finances hit by low oil prices, when the COVID-19 pandemic hit global demand. The Saudi government has spent 1 trillion Riyals from the national reserves in the last five years. At the recent World Economic Forum 2022, the Minister of Finance, Mohammed al-Jadaan stated, “We will ultimately consider cutting the VAT but at the moment we are still replenishing the reserves”. Additionally, the Minister has pointed out that the Kingdom is in the final stages of drafting its fiscal sustainability policy, which ensures the reverses do not fall below a certain percentage level of GDP.

Saudi Arabia initiate procedures for Phase 2 implementation As per the announcement on ZATCA's portal dated 24 June 2022, implementation of Phase Two (Integration Phase) of the E-invoicing project will begin on 1st January 2023 with selected taxpayers in the first wave. Resident companies with over SAR3 billion in taxable turnover in 2021 will be included in the first wave and should comply with the Phase 2 requirements. ZATCA will begin to inform and communicate with the targeted taxpayers to complete procedures for implementing Phase Two (Integration Phase) of E-invoicing.

ZATCA reclassified the penalties on VAT violations Zakat, Tax and Customs Authority (ZATCA) published a further announcement on its official website on 30 January 2022 regarding penalties for VAT violations. Below is a summary of the key changes:

• When field violations are committed, ZATCA will issue a notice the taxpayers without issuing any penalties. However, if violation continues after the first notice, a fine of 1000 SAR will be imposed and the amount will increase gradually for further violations.
• Granting the violator an appropriate period of three months to correct the violation.
• Twelve months is the cut-off limit for a non-recurring violation by the violating taxpayer, provided that the violation is treated and not committed again within the twelve months.
• This decision will take effect from January 30, 2022.

In addition, ZATCA published a simplified guide providing more information on the reclassification of VAT violations and examples relevant in every use case.

ZATCA announces penalties and violations for e-invoicing

Zakat, Tax and Customs Authority (ZATCA) announced violations and penalties of the first phase of e-invoicing (Generation Phase), which took effect on 4th December 2021.

Businesses who fail to issue and archive electronic invoices are subject to a fine between SAR 5,000- 50,000. In addition, the authority may issue a warning for not including the QR code on simplified tax invoices, not including the VAT registration number on the e-invoices where required, and failing to inform ZATCA of any malfunction that hinders the issuance of e-invoice. Amendment and deletion of e-invoices after issuance will also trigger a fine between SAR 10,000 – 50,000.

ZATCA has also clarified that all fines are applied depending on the types of violation and the number of times it has been committed. The penalties for first-time violations are likely to be modest, while repeat violations will attract higher fines.

ZATCA develops the Software Development Kit (SDK) Toolkit

The Zakat, Tax and Customs Authority (ZATCA) has developed the “SDK (Software Development Kit) Toolkit”, which enables taxpayers and developers of e-invoicing solutions to verify the compliance of generated e-invoices, credit, and debit notes, as well as the respective QR codes generated, against the e invoicing standards, specifications and regulations published by ZATCA.

A user manual is also available to guide users through the technical and functional aspects of the Compliance and Enablement Toolbox SDK such as what is the SDK, how to use it, and how to install it. To download the user manual and the SDK Toolkit, please access this page.

ZATCA publishes guide to develop a FATOORA compliant QR code

The Zakat, Tax and Customs Authority (ZATCA) published the guidelines for generating and printing QR codes on electronic tax invoices on 18 November 2021. The guide provides some further information on the QR code specification, Tag-Length-Value (TLV), how to create a TLV, code snippets as well as some details on the representation of QR code data.

For the full guideline, please visit: QRCodeCreation.pdf (zatca.gov.sa). Note that the use of QR codes on Tax Invoices will become mandatory from 01/01/23. QR codes are required on Simplified Invoices from 04/12/2021.

Further changes in the e-invoicing mandate

In Saudi Arabia, the deadline for the implementation of Phase 2 of the e-invoicing mandate has been delayed to 1^st January 2023 and it will be implemented in waves by targeted taxpayer groups. Select taxpayer groups will be informed 6 months prior to the go-live date.

In relation to Phase 1 – the Generation Phase, which will be enforced by December 4^th, 2021, there is no prescribed invoice format. However, e-invoices must be issued as a structured file. This means that from the implementation date, paper and PDF invoices no longer qualify as valid tax invoices.

The mandate rules for Phase 2 remain unchanged. E-invoices must be issued in XML/Hybrid (PDF A-3) format and suppliers will need to clear the invoices with GAZT before sending these to buyers. Due to the technical nature of the requirements in Phase 2, taxpayers are encouraged to consult a solution provider or their internal technical teams to ensure their e-invoicing systems comply with ZACTA (General Authority for Zakat and Tax) requirements.

Delayed go-live date for Phase two in the e-invoicing mandate

In Saudi Arabia, the Phase two enforcement date in the e-invoicing mandate has been delayed to 1st January 2023 and it will be implemented in waves by targeted taxpayer groups. Select taxpayer groups will be informed 6 months prior to the go-live date.

Due to the technical nature of the requirements in Phase two, taxpayers are encouraged to consult a solution provider or their internal technical teams to ensure their e-invoicing systems comply with ZACTA (General Authority for Zakat and Tax) requirements.

End of the Transitional Period for VAT rate increase

Further to VAT rate increase from 5% to 15% announcement effective the 1st of July 2020, the Zakat, Tax and Customs Authority (“ZATCA”) in Saudi Arabia has announced transitional rules governing supplies that are made during the transitional period for the VAT rate increase i.e. from 11 May 2020 to 30 June 2021. The transitional rules would not be applicable starting from the 1st of July 2021 onward and the VAT rate to be applied going forward should be 15% applicable to all supplies made (except where zero-rated or exempt by law).

Draft resolution published by GAZT: open for public consultation

We have now been aware for some time that KSA is moving towards mandatory e-invoicing.

On 18 March 2021, GAZT published a draft resolution – again for public consultation – on the requirements. The draft resolution includes technical specifications and procedures for implementing the provisions of the E-Invoicing Regulation. The resolution aims to specify the business and technical requirements that will need to be adhered to as Saudi Arabia moves toward e-invoicing.

GAZT encourages businesses start assessing how the e-invoicing regulations will impact their systems and processes and commence the planning work to successfully implement e-invoicing by the deadline of December 4^th, 2021.

An English translation of the draft resolution can be found here.

Saudi-Arabien veröffentlicht seine endgültige E-Invoicing-Verordnung

Wie wir bereits berichtet haben, ist Saudi-Arabien auf dem besten Weg zur verpflichtenden elektronischen Rechnungsstellung, nur 4 Jahre nach Einführung der Mehrwertsteuer im Königreich.

Im Herbst 2020 schloss Saudi-Arabien die öffentliche Konsultation zur geplanten E-Invoicing-Verordnung ab, gefolgt von der Genehmigung der endgültigen Version der Verordnung durch den GAZT-Vorstand. Diese endgültige Fassung wurde am 4. Dezember 2020 im saudischen Amtsblatt veröffentlicht und trat unmittelbar am Tag der Veröffentlichung in Kraft. Die Vorschriften enthalten den Rahmen des E-Invoicing-Mechanismus, den die GAZT voraussichtlich anwenden wird. Die Erwartung ist, dass Unternehmen, die in den Anwendungsbereich der Verordnung fallen, diese bis zum 4. Dezember 2021 erfüllen können.

Der Zeitplan ist sehr knapp bemessen, und es sind noch nicht alle Details klar. Es wird erwartet, dass vor dem Datum des Inkrafttretens weitere Details folgen, um den Steuerzahlern bei der Einhaltung der neuen Regeln zu helfen.

Dies ist ein straffer Zeitplan, und die Unternehmen im Königreich sollten Anfang 2021 mit der Implementierung beginnen. Wir sehen dies als eine einzigartige Gelegenheit für Unternehmen, digitale Technologien zu nutzen und von besser optimierten Steuervorgängen zu profitieren.

Verpflichtende elektronische Rechnungsstellung

Wie bereits in einem früheren Update erwähnt, macht das Königreich Saudi-Arabien große Fortschritte bei der Einführung einer verpflichtenden elektronischen Rechnungsstellung. Das System zur elektronischen Rechnungsstellung soll die illegalen Transaktionen in der Schattenwirtschaft reduzieren und gegen wirtschaftliche Täuschung vorgehen.

Die saudische Steuerbehörde (General Authority of Zakat and Tax, GAZT) genehmigte die neue Regulierung für elektronische Rechnungsstellung am Freitag, den 4. Dezember 2020. Die neue Regulierung besteht aus sieben Artikeln, die den Mechanismus zur Ausstellung und Aufbewahrung elektronischer Rechnungen für den Steuerzahler regeln. In der Regulierung werden außerdem die Verfahrensregeln und Fristen sowie weitere Vorschriften und Verfahren festgelegt und es wird erläutert, für welche Personen diese gelten. Die verpflichtende Ausstellung elektronischer Rechnungen wird am 4. Dezember 2021 eingeführt. Die verpflichtende Rechnungsberichtübermittlung an die Regierung folgt im Juni 2022.

Weitere Informationen finden Sie in der englischen Version der Regulierungen und den häufig gestellten Fragen zur elektronischen Rechnungsstellung der GAZT.

Das Königreich Saudi-Arabien ist auf dem Weg zu einem Mandat zur elektronischen Rechnungsstellung

Vor Kurzem veröffentlichte die saudische Generalbehörde für Zakat und Steuern am 17. September den Entwurf einer Verordnung zur elektronischen Rechnungsstellung. Dabei hat sie sich mit Experten aus der Branche beraten, um Anregungen für ihre Vorschläge zu erhalten. Tungsten ist aktiv am Beratungsprozess beteiligt, der am 14. Oktober endet.

Das Königreich Saudi-Arabien (KSA) kündigt eine Erhöhung der Umsatzsteuer an

Das Königreich Saudi-Arabien (KSA) kündigt eine Erhöhung der Umsatzsteuer von 5 % auf 15 % an: Der Finanzminister von Saudi-Arabien, Al Jadaan, hat angekündigt, dass die Umsatzsteuer ab dem 1. Juli 2020 von 5 % auf 15 % angehoben wird.

Königreich Saudi-Arabien führt Mehrwertsteuer ein

Im Februar 2016 kündigte der Golf-Kooperationsrat (GKR) an, dass die Mehrwertsteuer (MwSt) in den Golfstaaten ab Januar 2018 eingeführt werden würde.