Saudi Arabia Makes Electronic Invoicing Mandatory
The Saudi Arabian tax authority – General Authority of Thakat and Tax (GAZT) – will implement mandatory electronic invoicing beginning on December 4th, 2021.
The e-invoicing regulation was published on December 4th, 2020 and is expected to come into force within one year.
Who is Required to Invoice Electronically in Saudi Arabia?
The new regulation applies to B2B transactions and will affect all resident, taxable persons in Saudi Arabia. It will also affect third parties issuing invoices on behalf of a taxpayer subject to VAT. Companies that are not residents in the country are excluded.
A System Yet to be Defined
GAZT has yet to define the system and its technical specifications, but e-invoicing solutions are expected to meet the following requirements:
- Must be accesible online
- Must allow access by external systems through APIs
- Must apply control mechanisms that guarantee the authenticity and integrity of the information
- Must comply with security and cybersecurity requirements in the country
- The use of invoices in PDF format, whether scanned or in any other format besides the structured file, will not be allowed once e-invoicing becomes mandatory
Expected Timeframes for e-Invoicing Implementation
The Saudi Arabian tax agency has established two general phases for e-invoicing rollout. The first is a preparation phase; the second involves implementation of the new billing system.
Phase 1: Within 12 months of the approval of the e-invoicing regulation, companies should be prepared to generate electronic invoices, credit notes, and debit notes in a structured format. These documents must be generated using an electronic solution and must be stored electronically.
Phase 2: Beginning on December 4th, 2021, all VAT-taxable companies must begin issuing and storing electronic invoices, credit notes, and debit notes to justify the sale of supplies and services. Invoices will be issued through the GAZT system for electronic information exchange.
Further details on the requirements and procedures for integrating an e-invoicing solution, along with the implementation phases, will be announced no later than 180 days from the date of publication of the regulation.
The e-invoicing system will serve as a tool to eliminate the shadow economy and tax evasion in the country. It is also intended to promote fairer market competition and guarantee consumer rights, improving Saudi Arabia's valuation in the global market.
Recommendations for Preparing to Invoice Electronically
Although Saudi Arabia's e-invoicing system has yet to be defined, GAZT recommends that all taxpayers who are required to invoice begin preparations as soon as possible.
Businesses should consider whether they can comply with the technical requirements of the new system and should analyze their invoice volumes.
Another key aspect to take into account is the possibility of initiating a complete digitalization process with a scalable electronic invoicing solution.
EDICOM is a technology partner specialized in electronic data interchange (EDI) and e-invoicing solutions that operates in more than 70 countries and adapts its solutions to local legislation. Our expertise in e-invoicing compliance solutions allows EDICOM to rapidly expand services into new countries.
EDICOM's international e-invoicing platform (for invoice delivery and reception) is adapted to the specifications of the countries of origin and destination in which its users operate. It is constantly updated to align with local laws.