Any business that has an annual revenue of more than SAR 30 million in the period between 2021-2022 falls under wave 9 of phase 2. The ZATCA obliges them to comply with wave 9 of phase 2 by integrating the Fatoora portal on June 1st, 2024.
Key Requirements for Phase 2 Compliance
ZATCA is identifying additional needs for phase 2 that include:
- Integration of e-invoicing into Fatoora. Fatoora platform.
- Integrating field types that are mandatory in invoices.
- E-invoices delivered with the legal format required.
Additionally, ZATCA provides a minimum of six months’ notice to companies in advance of the integration date, allowing them plenty of time to plan and implement.
Overview of Waves Announced Under Phase 2
ZATCA has published the following waves that are focused on distinct turnover thresholds for businesses that are VAT-registered:
- Wave 1: Companies with a turnover of greater than SAR 3 billion by 2021 must be a part of Fatoora beginning on January 1, 2023..
- Wave 2: All companies with a turnover more than SAR 3 billion, but not less than SAR 500 million by 2021, will have their operations integrated before 1st July 2023.
- Wave 3: Businesses that had an annual turnover of between 250-500 million in SARs between 2021-2022, were certified on the 1st of October of October 2023.
- Wave 4: Businesses that have been registered with VAT and earn an income of between 150-250 million Saudi Arabian Rriyals in 2021 or 2022 will begin integration on 1st November 2023.
- Wave 5: Companies with a turnover higher than SAR 100 million but less than SAR 150 million in 2021, 2022 or 2030 will be able to join on December 1st, 2023.
- Wave 6: Businesses with total sales between SAR 70 million or SAR 100 million by 2021 or 2022 were anticipated to connect by 1st January 2024.
- Wave 7: Companies that have a turnover of 70 million Saudi Arabian Riyal by 2021/2022 must be compliant by the 1st of February 2024.
- Wave 8: Companies that generate between SAR 40 to SAR 50,000,000 between 2021-2022 must be included in the program prior to the 1st of March 2024.
Achievements of Phase 1 and the Road Ahead
Phase 1 plays a key role in protecting the consumers. The phase began to take effect on December 4, 2021. In this time, VAT registered taxpayers were required to:
- Stop issuing handwritten invoices.
- Be careful when using invoices made using software that alters your text.
- Adopt ZATCA-compliante-invoicing solutions.
- Include QR codes along with other details required in invoices.
- Store invoices as well as Credit or Debit Notes (CDNs).
The success of Phase 1 implementation brought awareness among taxpayers and helped to boost economic growth.
Phase 2 follows the achievements of phase 1 by improving the efficiency of e-invoicing and will assist the Kingdom to go digital. ZATCA believes this initiative is crucial in achieving the economic development vision which is being proposed through Saudi Arabia in Vision 2030.
With its methodological approach, ZATCA ensures businesses have enough time and resources in order to smoothly transition. ZATCA provides the ideal foundation for digital integration of wave 10 within the region.