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Saudi Arabia: New Fines for Non-compliance with E-invoicing Rules

Selin Adler Ring
November 17, 2021

Phase 1 of the e-invoicing system will be live in less than three weeks. While many businesses are still implementing a solution, the Saudi tax authority continues to publish more details on their official webpage.

One of the most recent announcements is about the fines the government will levy in case of non-compliance with the e-invoicing rules for phase 1, and it is currently published only in Arabic.

Details of the announcement

In the announcement, the ZATCA clarifies that the fines will be applied based on the type of violation and the number of times it is repeated. The fines might reach up to SAR 50.000 (approximately USD 13.330) per single violation. Considering e-invoices may fail to comply with different requirements simultaneously, the fines could be even higher per invoice.

The various instances requiring a fine are highlighted as follow:

  • Not issuing and storing invoices electronically
  • Not including a QR code on the simplified invoice
  • Not writing the VAT registration number of the buyer for tax invoices
  • Not notifying the authority of any malfunction that hinders the issuance of electronic invoices
  • Deleting or modifying electronic invoices after their issuance.

What’s next?

The announcement of new fines expresses the determination of the Saudi tax authority to launch the new e-invoicing system on time. Therefore, no delay is expected.

Taxpayers must ensure their compliance before 4 December to avoid facing fines and reputational damage. The success of phase 1 will be a significant parameter for the tax authority to determine the initial scope of phase 2. It has already been communicated by the ZATCA that there will be a roll-out period in which the government will notify taxpayers in the scope six months in advance.

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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.
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