Recently, detailed guidance for e-invoicing was released by the Zakat, Tax and Customs Authority (ZATCA) in Arabic and English. This guidance provides more information on the specific requirements of, and a time frame for, each phase during the implementation of e-invoicing in KSA.

The first phase of e-invoicing will start on 4 December 2021, when all taxable persons should be able to generate electronic invoices (e-invoices) and electronic notes (e-notes). This includes provisions related to their processing and recordkeeping, using an 'E-Invoice Generation Solution' that has been verified and approved by ZATCA.

The guidance clarifies different matters related to e-invoicing in KSA, the taxable persons who are obliged to comply with e-invoicing, transactions that are subject to e-invoicing, exemptions, and the types of e-invoices.

In addition, the guidance states that an e-invoice is an invoice most likely issued for a B2B and B2G transaction, while the simplified e-invoice is designed for a B2C transaction, where the buyer does not need to use the invoice for input VAT deduction.

The taxable persons who are required to issue e-invoices must complete their integration with the ZATCA portal. During the integration phase, e-invoices will be sent to the customer only after being cryptographically stamped and 'cleared' by ZATCA. A taxable person issuing a simplified e-invoice only needs to share a copy of the simplified invoice with their customer; there will be no need to integrate with the ZATCA portal, provided that the simplified e-invoices are reported to the Authority within 24 hours of issuance in XML format.

Violations and penalties

All regulations related to tax invoices, as mentioned in the KSA VAT Implementing Regulations, will be applicable to e-invoices, including the violations and penalties prescribed in the VAT law.

Time Frame: 

Phase Time Frame Action by persons obligated
Grace period for the software testing 3 December 2021

Only 80 days left to get your internal invoicing system ready

Consult with your IT and tax advisor to implement
First phase - go live 4 December 2021 Check if you are obligated or exempted under the regulations
Further details on the integration process will be released 30 June 2022

This will be implemented in a phased roll-out

ZATCA will inform the selected taxable persons in six months
Second phase - go live 1 January 2023

The selected persons (mentioned above) need to complete their integration with the ZATCA portal

How we can help

The TMF Group team in the Middle East can assist your company during the implementation of e-invoicing regulations in KSA.

We have a dedicated team to assist you on any query you have on e-invoicing and we are modifying our software to assist our accounting clients with e-invoicing regulations via our invoicing services:

  • Issuing e-invoices and e-notes whenever required
  • Reviewing all information included in each e-invoice and e-note (eg TRNs, QR code, FOREX rate)
  • Ensuring e-invoices are issued and archived in PDF/A-3 format
  • Ensuring integration with the ZATCA portal (if required)
  • Exchange of simplified invoices with ZATCA within 24 hours (if any).

In addition, we can collaborate with software providers to help our non-accounting clients to accommodate one of the accredited ERP systems and be ready for the integration phase with the ZATCA portal:

  • Reviewing and analysing current transactions
  • Advising the client whether they will be fully or partially exempted from complying with e-invoicing regulations
  • Check the ERP system and billing components to ensure compliance with the new e-invoicing rules and procedures
  • Reviewing VAT ledgers and returns to ensure compliance
  • Assisting with ZATCA portal integration in the second phase.

Talk to TMF Group

TMF Group's accounting and tax team based in the Middle East can help you to prepare your business for the change and assist with ongoing compliance.

Have questions or need more information? Make an enquiry. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.