On May 28, 2021, The Zakat, Tax and Customs Authority (ZATCA) published guidelines and standards for the implementation of the e-invoicing system (“FATOORAH”). The new guidelines have postponed phase two of the e-invoicing system from July 1, 2022, to January 1, 2023. The effective date of phase 1 of the e-invoicing implementation remains December 4, 2021.

Phase 1 requires taxpayers to issue and store electronic invoices and notes while Phase 2 requires taxpayers to transmit e-invoices and notes, and submit these documents to the tax administration for validation and stamping.

On November 18, 2021, the ZATCA published the “Guide to Developed FATOORA Compliant QR Code,” which clarifies the implementation of QR codes on B2C simplified tax e-invoices for Phase 1 (Generation Phase) of Saudi Arabia's implementation of e-invoicing. The minimum requirements that must be included in the QR code in Base64 Tax-Length-Value (TLV) format are:(1) the seller's name, (2) the VAT registration number of the seller, (3) the time stamp of the invoice (date and time), (4) the invoice total amount (including VAT), and (5) the total VAT amount.

The ZATCA recently published English translations of several guidelines including the “E-invoicing Detailed Guidelines,” which contain information regarding technical and security requirements, data dictionary, and security specifications for e-invoicing, and the “Simplified Guidelines For E-invoicing Phase 1,” which contain the requirements to issue, amend, and save invoices electronically.

On December 9, 2021, the ZATCA approved amendments to the VAT implementing regulations to include new e-invoicing regulations. The amendments relate to Article 53 for Tax Invoices, Article 54 for Credit and Debit Notes, and Article 66 for Records of the VAT Implementing Regulations.

The ZATCA published a new guideline announcing the reclassification of VAT violations and associated fines and penalties that will be imposed for non-compliance with VAT and e-invoicing rules effective January 30, 2022. Taxpayers will now receive a notification first and education about the violation before fines are imposed. Taxpayers will have up to three months to correct the violation. The fines levied depend on the type of violation and the number of times the violation has occurred, as outlined below. A violation is considered recurring if it reoccurs within twelve months.

VAT violations such as failure to issue a tax invoice, including all elements on the tax invoice, incorrectly calculating tax, etc.:

  1. for the first violation notice is issued;
  2. for the second violation a fine of SAR 1,000 is levied;
  3. for the third violation a fine of SAR 5,000 is levied;
  4.  for the fourth violation a fine of SAR 10,000 is levied;
  5. thereafter a fine of SAR 40,000 is levied.

E-invoicing violations such as failure to issue and save e-invoices, deleting e-invoices or adjusting after issuance, using prohibited functions in the e-invoicing system, etc.:

  1.  for the first violation notice is issued;
  2. for the second violation a fine of SAR 1,000 is levied;
  3. for the third violation a fine of SAR 5,000 is levied;
  4. for the fourth violation a fine of SAR 10,000 is levied;
  5. thereafter a fine of SAR 40,000 is levied.

ZATCA launched an E-Invoicing Developer Portal (Sandbox) to simulate ZATCA’s e-invoicing platform Fatoorato view API details and verify the requirements of Phase Two.

ZATCA announced the first wave of taxpayers required to comply with Phase 2 e-invoicing implementation effective January 1, 2023. Additionally, on June 24, 2022, ZATCA published the final version of the E-invoicing Data Dictionary, E-invoicing XML Implementation Standard, and E-invoicing Security Implementation Standards. These documents were open for public consultation until June 10, 2022.

On June 1, 2022, ZATCA announced the re-launch of the amnesty initiative that waives penalties for certain violations for all tax systems (including VAT and income tax) for 6 months beginning June 1, 2022, through November 30, 2022. This includes e-invoicing violations.

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