e-Invoicing for Oil and Gas Industries in KSA

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08 min read.

Saudi Arabia is one of the Gulf Council Counties (GCC) and produces around 17% of the world’s petroleum reserves. Saudi is one the largest net exporters of petroleum and is also a member of the Organization of Petroleum Exporting Countries (OPEC).

Also, Saudi plans to digitise its operation and move towards a digital economy under National Transformation Program by 2030. Accordingly, it planned to implement e-invoicing in two phases through Zakat, Tax and Customs Authority (ZATCA). It implemented phase 1 of e-invoicing in Saudi Arabia on 4th December 2021. 

In continuation, It announced the businesses with a turnover of more than SAR 3 billion in 2021 as the first targeted group (wave 1) under phase 2 to implement e-invoicing from 1st January 2023. It recently announced that businesses with more than SAR 500 million turnover will be the second targeted group (wave 2) to implement phase 2 from 1st July 2023.

Hence, all e-invoicing applicable businesses in Saudi Arabia must gear up and integrate their ERP/ POS systems with ZATCA. Let’s see how the oil and gas businesses can implement e-invoicing in Saudi Arabia.

23rd December 2022
ZATCA announced that the businesses in KSA with greater than SAR 500 million turnover fall under the second targeted group/ wave 2 under phase 2 of e-invoicing, and they must integrate their ERP/POS by 1st July 2023.

Invoicing in oil and gas industries

A supplier must issue any of the below invoices within 15 days from the end of the month in which the supply was made: 

  • A tax invoice in case of a Business to Business (B2B) sale.
  • A simplified tax invoice in case of transaction value is less than SAR 1,000.
  • A simplified tax invoice in case of Business to Consumer (B2C) sales.

Also, the tax invoice must mention the invoice date, Value Added Tax (VAT) number of the buyer, Invoice amount, VAT rate, and VAT amount.

How can the oil and gas businesses implement e-invoicing in Saudi?

Under phase 2 of Saudi e-invoicing, the oil and gas businesses must integrate their POS/ accounting systems with the ZATCA’s system for ‘Clearance’ of tax invoices and related Credit and Debit Notes (CDNs), and ‘Reporting’ of simplified tax invoices and related CDNs.

Oil and gas businesses must perform Business Impact Analysis (BIA) to understand the 

  • Infrastructure requirements
  • Required technical capabilities
  • Mode of e-invoicing integration
  • Modifications to business process
  • Changes to invoicing process
  • Archival requirements under Saudi laws
  • Changes to the VAT return filing process
  • Overall business impact

Most of the business transactions in the oil and gas business fall under either the B2B or exports category. Hence businesses must integrate with ZATCA in real time to run the business smoothly. Opting for cloud solutions such as ClearTax to seamlessly integrate with ZATCA and implement phase 2 of e-invoicing in Saudi Arabia is recommended. 

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