Wave 3 of the Zakat, Tax, and Customs Authority electronic-invoicing initiative began on July 1 2023, aimed at businesses with revenues that exceed SAR 250,000,000. This phase was a crucial step on Saudi Arabia’s path to a transparent and fully digital tax system. It included medium-sized businesses into the compliance framework.
Target group and Objectives
Wave 3 concentrated on medium-sized businesses, which are important to the Saudi economy. Due to their technological and operational maturity, these businesses were considered ready to adopt e-invoicing software. This phase had the following key objectives:- Extending e-invoicing to a wider variety of businesses.
- Assuring seamless integration of these companies into the digital tax ecosystem.
- Transparency and compliance in financial transactions.
Mandatory Compliance Requirements
- E-Invoice Generation:
- Businesses had to produce structured electronic invoices, related documents (credit/debit note) and other formats in XML and PDF/A-3 embedded with XML.
- The invoices must include certain mandatory fields such as the seller and buyer’s details, VAT registration number, invoice dates and line item details.
- QR code Implementation:
- QR Codes with essential invoice data such as VAT numbers, invoice totals and invoice summaries were required on simplified invoices. It allowed ZATCA and customers to verify invoices quickly.
- Secure storage:
- Businesses had to store electronic invoices securely, in order to ensure data integrity and accessibility.
System Integration with ZATCA
Wave 3 focused on the integration of ZATCA Fatoora platform with business systems, enabling:- Real Time Data Exchange: Businesses need to send invoices to ZATCA to validate and approve.
- Error detection: integration allowed ZATCA’s invoice details to be compared with regulatory requirements. This reduced the possibility of discrepancies.
Digital Security Enhancements
Wave 3 emphasized the importance of digital signatures in authenticating e-invoices, and ensuring their legal validity. This step protected invoices from unauthorized access or tampering.Impact on Businesses
Wave 3 targeted medium-sized businesses, bringing a large portion of the sector in compliance with ZATCA’s electronic-invoicing framework. This phase:- The government can streamline the tax collection process.
- Transparency and accountability can increase trust in transactions.
- Businesses are encouraged to adopt new technologies and contribute to their digital transformation.