ZATCA has developed the Wave 5 under phase 2 for the Kingdom of Saudi Arabia. This strategic phase is intended to improve compliance and to meet the Kingdom’s other aims of increasing economic transparency and digital innovations.
Wave 5: Targeted Business
Wave 5 applies to Saudi Arabian businesses who are registered for VAT and have an annual turnover greater than 2,5 million Saudi Arabian Riyals in the period between 2022 and 2023.
All these businesses will have to integrate Fatoora with their E invoicing systems by the 31st of July 2025.
Announcements
ZATCA also announced deadlines to the next waves.
Wave 18: Companies with an annual turnover of more than SAR 2,00,000 (2022 or 2023) will be required to integrate before the 31st of August, 2025.
Wave 17: Businesses whose revenue exceeds SAR 2,5 Million (2022 or 2023) must integrate by July 31, 2025.
Wave 16:Businesses with a revenue more than SAR 3,000,000 in 2022 or 2023, are required to make the digital transition by 1st April 2025.
Compliance Requirements
ZATCA has provided the following additional measures of compliance for Phase 2 e-invoicing.
- Integration with Fatoora Portal : Businesses must connect their eInvoicing solutions to ZATCA’s central platform.
- The Enhanced Invoice fields: According to regulatory requirements, E-invoices are required to include certain additional fields.
- Approved digital formats: All invoices issued must conform to the prescribed electronic format.
To ensure a smooth transition, taxpayers are informed at least six month prior to the deadline for their integration.
Overview of Announced waves
ZATCA is implementing Phase 2 in waves that target specific turnover brackets.
Wave 1: Taxpayers registered for VAT with a turnover of over 3 billion (SAR) in 2021will be integrated by the beginning of January, 2023.
Wave 2: Saudi Taxpayers with a turnover of between SAR 500 Million and SAR 3 Billion (2021) must integrate by the 1st of July 2023.
Wave 3: Businesses that have turnover between 250 Million to 500 Million SAR in 2021 or 2022 will be integrated by 1st Oct 2023.
Wave 4: Taxpayers whose turnover is between SAR 150 and SAR 250 millions (2021 or 2022), will become integrated by 1 Dec 2023.
Wave 5: Businesses that have a turnover of more than SAR 2.5 Million (2022 or 2023) must integrate before 31st July, 2025.
The success of Phase 1
Saudi Arabia began phase 1 of its e-invoicing on the 4th December 2020, requiring key changes to invoicing practices.
- Elimination of invoices written by hand
- Bills created using text editing software are prohibited
- Adoption of ZATCA compliant e-invoicing solution
- Compliance with QR codes and additional invoice requirements
- Store e-invoices properly and with the associated Credit or Debit notes (CDNs).
Moving Forward
ZATCA has announced Wave 5 as part of its ongoing phased approach for e-invoicing. This will ensure that businesses have the time and tools to align themselves with the ambitious economic and digital goals of the Kingdom. It also paves the way for wave 6.