ZATCA E-Invoicing Phase 2: Scope, Guidelines, and Regulations in Saudi Arabia
E-Invoicing in Saudi Arabia (SA) was introduced as an integral part of the economic renaissance and digital transformation efforts. This initiative aligns with the broader goals of enhancing consumer protection and reducing concealed economy transactions.
The Zakat, Tax, and Customs Authority (ZATCA) issued a set of requirements, technical specifications, controls, and procedural guidelines for the implementation of Phase 2 of e-invoicing in SA. Additionally, they provided XML implementation standards, e-invoice security features implementation standards, and a data dictionary specifically tailored for Phase 2, all of which became effective on January 1, 2023.
The Phase 2 regulations are of paramount importance for taxpayers as they pertain to compliance with the integration phase. During Phase 2, businesses are required to integrate their Point of Sale (POS) and accounting systems with the Authority's system to facilitate:
1. The clearance of tax invoices and associated Credit and Debit Notes.
2. The reporting of simplified tax invoices and related Credit and Debit Notes.
E-Invoicing Phases in Saudi Arabia
The introduction of e-invoicing in Saudi Arabia (SA) occurred on December 4, 2021, with the issuance of the electronic invoicing regulation by the Zakat, Tax, and Customs Authority (ZATCA). The implementation of e-invoicing in SA was planned in two distinct phases: Phase 1 and Phase 2.
Phase 1 of Saudi E-Invoicing
Phase 1 became effective on December 4, 2021. During this initial phase, taxpayers were mandated to generate, store, and manage tax invoices, simplified tax invoices, and the corresponding Credit and Debit Notes (CDNs) using compliant e-Invoicing Generation Solutions (EGS).
Phase 2 of Saudi E-Invoicing
Phase 2 is scheduled to be implemented starting from January 1, 2023. In Phase 2, the focus shifts towards the integration of the taxpayer's system with that of ZATCA. This integration enables the seamless transmission of e-invoices and related CDNs, which are then shared with ZATCA. The implementation of Phase 2 is overseen by ZATCA, with notifications provided regarding the criteria for resident taxpayers and their respective effective dates. The earliest implementation date for Phase 2 is set for January 1, 2023.
E-Invoicing Phase 2 Regulations
ZATCA initially released the phase 2 regulations on May 28, 2021, which encompassed both phase 1 and phase 2 requirements. However, ZATCA stated that the phase 2 requirements would undergo a review and potential amendments. Consequently, ZATCA made revisions and issued the finalized phase 2 regulations on June 24, 2022.
Impact of Phase 2 of e-Invoicing on Businesses
VAT-registered businesses operating in Saudi Arabia, with taxable supplies exceeding SAR 3 billion in 2021, are obligated to adopt Phase 2 of e-invoicing starting on January 1, 2023. Non-compliant businesses will face penalties in accordance with VAT legislation.
These affected businesses must adhere to the responsibilities outlined in the Phase 2 regulations as per ZATCA's official notification. Furthermore, they are required to undertake the necessary measures to implement the mandated changes within their business operations and information technology infrastructure.
How ApiZatca Can Assist You in Achieving Compliance with Phase 2 of Saudi E-Invoicing
ApiZatca solution offer seamless integration of your ERP/POS systems with ZATCA, requiring minimal adjustments, thereby facilitating your compliance with Phase 2 of Saudi e-invoicing.
ApiZatca solution software boasts a range of features including:
Over intelligent data validations to ensure error-free invoice generation.
Conversion of invoices into the specified XML format Automatic and generation of QR Code.
Retrieval of clearance/report XML invoices and receipt of certified XML documents from ZATCA.
Inclusion of Phase 2 QR code and certified XML into existing invoices to produce the final PDF A/3 invoice.
To embark on your journey towards generating Phase 2 compliant e-invoices, click here to get started with ApiZatca.