Saudi Arabia E-invoice

Implementation of mandatory e-invoicing in Saudi Arabia

• December 4, 2021 – Phase 1 ("Generation Phase"): All VAT-registered businesses in Saudi Arabia were required to begin issuing electronic invoices instead of paper invoices. This phase mandated the use of structured formats, inclusion of required fields (like QR codes), and the use of compliant e-invoicing solutions. However, no real-time submission to authorities was required yet.
• January 1, 2023 – Phase 2 ("Integration Phase"): Businesses exceeding a certain revenue threshold (initially SAR 3 billion, then progressively lower) were required to integrate their e-invoicing systems with ZATCA’s Fatoora Platform. Invoices must be cleared in real time or reported within 24 hours of issuance. ZATCA provides specific APIs and security protocols for integration.
• 2024–2025: Phase 2 is being gradually extended to medium and small-sized businesses in waves. ZATCA publishes lists of affected taxpayers and implementation dates several months in advance. All covered taxpayers must comply with both generation and integration requirements, including system readiness and digital certificate installation.

Compliance dates by revenue threshold (SAR)

Who needs e-invoices in Saudi Arabia?

• Large Enterprises: Must integrate with Fatoora for issuing and validating invoices.
• Small and Medium Enterprises (SMEs): Gradually included in the rollout.
• Non-resident businesses: Currently exempt, but future obligations may apply for transactions with Saudi entities.

E-Invoicing vs. E-Billing

Key features of Saudi Arabia’s e-invoicing system

• Submission via Fatoora: Businesses must submit invoices in XML format.
• Validation: ZATCA ensures compliance and issues cryptographic stamps and hash values.
• Archiving: Invoices must be stored electronically for 6 years for audits.

E-Invoicing dataset

• Buyer/Seller IDs: VAT identification numbers.
• Invoice Details: Invoice number, issue date, and payment terms
• Goods/Services: Descriptions, quantities, unit prices, and VAT details.
• Taxes: Detailed VAT rates and amounts
• Transaction Info: Total payable amount, payment method, and currency.
• QR Code: Mandatory for simplified invoices.

E-invoicing across transaction types

• B2B: TransactionsMandatory validation via Fatoora ensures VAT compliance and reduces manual errors.
• B2C:  Transactions Simplified e-invoices with QR codes are required for consumer transactions.
• B2G:  Transactions Mandatory for government transactions, ensuring transparency and compliance.

Penalties for non-compliance

• Fines: €1,250–€12,500 per violation.
• Operational Disruptions: Rejected invoices can delay payments and negatively impact cash flow.
• Legal Risks: Repeated violations may lead to audits, legal action, and reputational damage.