Regulatory updates - Saudi Arabia

This group encompass taxpayers with revenues subject to VAT exceeding SAR 4 million (ca. EUR 960 000) during 2022 or 2023. They are now obliged to issue e-invoices and integrate their e-invoicing solution with the FATOORA platform between 1 March and 31 May 2025. 

ZATCA will contact targeted taxpayers in this wave.

On 28 August 2024, ZATCA released proposed amendments to the VAT Implementation Regulations, open for public consultation until  17 September 2024. Overall, the changes aim to:

• Align tax procedures with international best practices;
• Enhance tax refund policy efficiency;
• Improve compliance to help taxpayers meet obligations;
• Support the Kingdom's tourism sector.

The amendments affect 26 articles, including their sub-provisions of the current VAT law. Key highlights include:

Timeframe for issuing credit and debit notes

The new text aligns the issuance timeframe for credit and debit notes with that of tax invoices, requiring them to be issued no later than fifteen days after the month following the date on which the event occurs.

Tax group registration requirements

The amendments simplify registration by focusing on residency, economic activity, ownership/control criteria, and more.

Nominal supplies

The changes clarify several aspects of nominal supplies, with one specifying that they are treated as supplies for consideration unless stated otherwise, unlike the previous text, which referred only to provisions in the VAT agreement.

For full details on the amendments, please visit the Istitlaa platform here. 

On 26 July 2024, ZATCA published the threshold for the selected taxpayers required to integrate with the Fatoora platform from 1 February 2025. This group encompasses taxpayers whose revenues subject to VAT exceeded SAR 5 million (ca. EUR 1.2 million) during 2022 or 2023.

Taxpayers included in scope will be contacted by ZATCA.

The selected taxpayers in the thirteenth wave of the Integration Phase are those with revenues subject to VAT exceeding SAR 7 million (ca. EUR 1.7 million) during 2022 or 2023. ZATCA will notify the taxpayers in scope.

This wave is scheduled to start on 1 January 2025, and taxpayers have to comply by 31 March 2025.

The Zakat, Tax and Customs Authority (ZATCA) has announced an extension of its Cancellation of Fines and Exemption of Financial Penalties Initiative for taxpayers.

To benefit from the initiative, which applies to all tax laws in the Kingdom, taxpayers must register under the relevant tax laws, submit all previously unfiled returns, and pay the principal tax debts associated with these returns. An instalment payment plan is available, provided the application is made within the initiative’s timeframe, and all instalments are paid on schedule. However, penalties related to tax evasion and fines paid before the initiative's start date are excluded from this exemption.

Taxpayers are encouraged to review the detailed guidelines on ZATCA’s website for more information on penalty types, including conditions for benefitting from the exemption and steps for instalment payments.

On 24 May 2024, ZATCA (Zakat, Tax and Customs Authority) announced the threshold for taxpayers included in the twelfth wave. This group are required to integrate their e-invoicing solution with the Fatoora platform between 1 December 2024 and 28 February 2025.

The wave includes taxpayers with revenues subject to VAT exceeding SAR 10 million (ca. EUR 2.5 million) during 2022 or 2023. 

ZATCA will notify taxpayers in the scope of the twelfth wave.

On 26 April 2024, ZATCA published the criteria for the eleventh wave of Phase 2 (Integration Phase). Selected taxpayers have revenues subject to VAT greater than SAR 15 million (ca. EUR 3.7 million) during 2022 or 2023.

This taxpayer group in scope will have time until 31 January 2025 to adhere to the e-invoicing regulation.

Pagero continues to follow the Kingdom of Saudi Arabia’s progress in introducing electronic invoicing. Stay tuned for more updates in .

On 29 March 2024, Zakat, Tax and Customs Authority (ZATCA) published the criteria for selecting the taxpayers who must comply with the Phase 2 requirements in the tenth wave.

This wave of Phase 2 (Integration phase) includes all taxpayers subject to VAT with annual taxable revenue exceeding 25 million SAR (ca. EUR 6.2 million) during 2022 or 2023.

The Integration Period for the tenth wave starts on 1 October 2024 and ends on 31 December 2024. All targeted taxpayers will be notified by ZATCA.

ZATCA continues to extend gratitude in light of the progress of the electronic invoicing obligations adopted in the jurisdiction. The authority recognizes the responsibility placed upon service providers as well as the authority itself. At the same time, it acknowledges the benefits of facilitating services necessary for connecting and integrating with the authority for electronic document submission. 

In addition, the authority informs parties that Article Ten of the agreement associated with service providers states the consequences of non-compliance with obligations. If either party fails to fulfil its duties, the other party reserves the right to terminate the agreement.  

As the above-mentioned fourth wave ends on 29 February 2024, Pagero will continue to adhere to the requirements and follow ZATCA’s developments. 

As previously mentioned, ZATCA announced an initiative to suspend fines and penalties for taxpayers subject to all tax laws in the Kingdom. ZATCA has emphasized that the fines enclosed in the initiative include, among others, late or non-registration in all tax systems, late payments, late submission of declarations, and most importantly, penalties for violations of e-invoicing rules and regulations.

On 29 December 2023, ZATCA announced a rescheduling of the timelines – the exemption period that was supposed to expire on 31 December 2023 will now be extended until 30 June 2024. This will give taxpayers an additional 6 months to comply with e-invoicing rules and rectify any potential issues or mistakes without any consequences.

For a detailed clarification of the scope and applicability of the penalty exemption initiative, visit the simplified guideline available on ZATCA’s website here.