Saudi Arabia leads the way to continuous transaction controls in the Gulf
Saudi Arabia introduced an e-invoicing regime with a phased approach in December 2021. Having only introduced VAT on 1 January 2018, the country is already leading the way in digitizing tax compliance in the Gulf Region.
According to the finalised rules published by Saudi Arabia’s tax authority, Zakat, Tax and Customs Authority (ZATCA) the go-live date of the second phase is 1 January 2023.
In addition to other requirements, Phase 2 also introduced integration with a digital ZATCA platform for continuous transaction controls (CTCs), requiring taxpayers to clear invoices ahead of transmission to buyers.
Phase 1 – Mandatory e-invoicing generation with post audit controls: Started on 4 December 2021
Storage requirements same in both Phases 1 and 2. Documents can be stored on Cloud, a direct link to the online data must be available. In case the storage is outsourced, documents must be kept by a third party established within the territory of Saudi Arabia.
Suppliers must store e-invoices in a structured format regardless of how they’re exchanged with buyers.
Phase 2 – CTC regime: Started on 1 January 2023, requiring taxpayers to transmit e-invoices in addition to electronic notes to tax authority ZATCA for clearance
Phase 1: 4 December 2021 – All resident taxable persons in the Kingdom to generate, amend and store e-invoices and electronic notes (credit and debit notes).
Phase 2: 1 January 2023 – Additional requirements for taxable persons to transmit e-invoices and electronic notes to the ZATCA. It will be a phased adoption starting with larger companies, with more gradually coming into the scope of the mandate. Companies can expect six months’ notice before the deadline by which they must comply.
Need help to ensure your business is VAT compliant in Saudi Arabia? Sovos serves as a true one-stop-shop for managing all e-invoicing compliance obligations in Saudi Arabia and across the globe. Sovos uniquely combines local expertise with a seamless, global customer experience.