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Checklist to Implement ZATCA e-Invoicing in Saudi Arabia

Updated on: Apr 4th, 2023


5 min read

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The Saudi Arabia government aims to move towards digitisation, and e-invoicing is one of its initiatives. Zakat, Tax and Customs Authority (ZATCA), the tax authority in the Kingdom of Saudi Arabia (KSA), implemented phase 1 of e-Invoicing on 4th December 2021.

The first phase of the e-invoicing in KSA applies to all resident taxpayers. Also, it applies to customers and third parties issuing tax invoices on behalf of the resident taxable person. However, non-residents (for VAT purposes) don’t have to implement e-invoicing.

Further, ZATCA has planned to implement phase 2 of e-invoicing in waves. Accordingly, it notified taxpayers with more than SAR 3 billion turnover in 2021 must begin integrating with the Fatoora portal from 1st January 2023.

Recently, it announced that taxpayers having more than SAR 500 million turnover in 2021 will fall under wave 2 of phase 2. Such taxpayers must begin integrating their systems with ZATCA from 1st July 2023.

This article gives you the checklist to implement ZATCA e-invoicing smoothly.

Checklist for a business on implementation of ZATCA e-invoicing

  • First, you must perform the Business Impact Analysis (BIA) to understand the impact of e-invoicing, modifications to the existing processes, and requirements to implement e-invoicing.
  • Further, you must decide on the mode of integration for e-invoicing based on your business model and the type of e-invoices you need to raise.
  • You must decide between opting for a third-party e-invoicing software provider or developing the e-invoicing solution in-house.
  • It is recommended to opt for a cloud-based third-party e-invoicing solution to comply with e-invoicing at ease.
  • Also, when you opt for a third-party solution, you must ensure that their e-invoicing software is ZATCA compliant and is in line with all KSA laws.
  • If you decide to develop in-house, your technical team must follow ZATCA’s website to stay updated regarding all the technical and security requirements.
  • You must assess whether you have the required technical and infrastructure capabilities to implement e-Invoicing. If not, you must bring in those for smooth implementation of e-invoicing.
  • Once your e-invoicing software is ready, you must test the process before the enforcement date.
  • You shall decide on the archival of e-invoices as per the ZATCA requirements.
  • You must integrate the e-invoicing solution with the Fatoora portal and generate sample e-invoices to check whether they are generated according to the e-invoicing regulations.
  • You have to revisit the impacted business processes, such as logistics, accounts receivables, vendor management etc., due to the implementation of e-invoicing and re-align according to the new process.
  • You should properly train your accounting team/ staff about the e-invoicing system so they can understand the process better and run the invoicing function smoothly.