,

Saudi Arabia: Mandatory E-Invoicing from 2021

Selin Adler Ring
December 8, 2020

These days another country adopting a continuous transaction control (CTC) regime doesn’t come as a surprise. Having seen the benefits of CTC systems, countries are increasing their efforts to implement these regimes in a way that meet their needs. Saudi Arabia is following this trend by introducing a new e-invoicing system that is expected to be a CTC regime. The details are yet to be published however the initial E-invoicing Regulation (Regulation) has recently been enacted and was published on 4 December 2020.

Highlights of the Regulation

The new framework is set to go live a year from now, on 4 December 2021, and will apply to all resident taxable persons, as well as any third party who issues a tax invoice on behalf of a taxable person residing in the Kingdom.

According to the Regulation, an e-invoice is an invoice that is issued, saved and amended in electronic form. Credit and debit notes resulting from adjustments to e-invoices must also be issued electronically. A paper invoice that is converted into an electronic format through copying, scanning, or any other method is not considered as an electronic invoice, nor is unstructured invoice data.

Cross-border transactions are also within the scope of e-invoicing reform. Taxable persons in scope must issue e-invoices for all taxable supplies, regardless of if they are in the basic or zero rate and if issued to a resident or non-resident customer in the Kingdom.

The regulation stipulates minimum requirements for any electronic device, system or application used to issue e-invoices, debit and credit notes. According to these requirements, the systems (devices or applications) used must meet the following conditions:

  • The ability to connect to the internet
  • Complying with the requirements and controls of data, information, or cybersecurity in the Kingdom
  • Be tamper-proof and include an anti-tampering mechanism
  • Be interchangeable with external systems using API

Implementation of the e-invoicing system will be carried out in two stages:

  • The first stage will consist of issuing and saving e-invoices, e-debit and e-credit notes in a structured electronic format via an electronic system that contains all tax invoice requirements.
  • The second stage will require taxpayers to connect their systems with the General Authority for Zakat and Tax (GAZT) to share the data and information.

It is because this second stage will require taxpayers to share their invoice data with the GAZT that we expect the e-invoicing reform will be a CTC regime. However, it’s not yet clear how frequently taxpayers will have to transmit the invoice data and whether invoices will be still valid if not transmitted.

What’s next?

In published FAQs, the GAZT states that two additional components to the framework (introducing further requirements and technical specifications in the form of Decisions) are still to be released. The first one relating to specifications for issuing and saving e-invoices, debit and credit notes (first stage), the second one relating to specifications for connecting to the GAZT systems (second stage). The GAZT will issue these two Decisions within less than 180 days from the date of publishing the Regulation.

For now, the GAZT recommends taxpayers determine whether they are subject to the e-invoicing regulation and then evaluate their readiness to issue and save e-invoices to meet the minimum standards and requirements stipulated in the Regulation, in addition to following the official channels of the authority to keep up to speed with any additional technical details.

Take Action

Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Selin Adler Ring

Selin is Regulatory Counsel at Sovos. Based in Stockholm and originally from Turkey, Selin’s background is in corporate and commercial law, and currently specializes in global e-invoicing compliance. Selin earned a Law degree in her home country and has a master’s degree in Law and Economics. She speaks Russian, Arabic, English and Turkish.
Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on email

North America ShipCompliant
August 9, 2022
2022 Direct-to-Consumer Wine Shipping Mid-Year Report

A lot has changed in the direct-to-consumer (DtC) wine shipping channel since the January release of our Direct-to-Consumer Wine Shipping Report—changes in volume and value that have the market resembling pre-pandemic patterns. Note: The proprietary data featured in this mid-year report is compiled from an algorithm measuring total DtC shipments based on millions of anonymous […]

E-Invoicing Compliance EMEA Italy
August 9, 2022
Italian Import Documents Become Electronic

The Italian Customs Authorities recently updated their national import system by applying the new European Union Customs Data Model (EUCDM). These new changes came into effect on 9 June 2022. According to the new procedure, the old model of paper import declarations has been abolished. The import declarations are now transmitted to the Italian Customs […]

E-Invoicing Compliance EMEA India
August 4, 2022
India: B2C Invoicing QR Code Requirement

In India, the e-invoicing system has been live since 2020. Taxpayers in the scope of e-invoicing mandate must issue their invoices relating to B2B and B2G transactions through the e-invoicing system, which is a form of continuous transaction controls (CTC). However, B2C invoices are not issued through the CTC system, which means that B2C invoices […]

E-Invoicing Compliance EMEA India
August 2, 2022
India: New Taxpayers to Comply with E-invoicing Rules

As previously predicted by Sovos, the threshold for implementing mandatory e-invoicing has been lowered by the Indian authorities. According to the Central Board of Indirect Taxes and Customs Notification No. 17/2022 – Central Tax, from 1 October 2022 compliance with the e-invoicing rules will be mandatory for taxpayers with an annual threshold of 10 Cr. […]

Asia Pacific E-Invoicing Compliance EMEA
August 1, 2022
eGUI: Taiwan’s Approach to Electronic Invoicing

Since 1 January 2020 foreign electronic service providers must issue cloud invoices, a type of e-invoice, for sales of electronic services to individual buyers in Taiwan. Alongside this, Taiwan’s local tax authorities have been introducing incentives for domestic taxpayers to implement e-invoicing despite this not being a mandatory requirement. Before diving into the details of the […]