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E-invoicing: A Requirement In The Kingdom of Saudi Arabia

Written by Kevin Little

June 15, 2023

Electronic Invoicing

E-Invoicing Developments in Saudi Arabia

In order to comply with Saudi Arabian tax regulations, the General Authority of Thakat and Tax (GAZT) will begin requiring all invoices to be submitted electronically on December 4, 2021.

The e-invoicing legislation was issued on December 4th, 2020, and it is anticipated to come into effect within a year of its publication.

In Saudi Arabia, who is required to provide invoices using electronic means?

The new law applies to business-to-business transactions and will have an impact on all Saudi citizens who are residents and taxable persons in the country. It will also have an impact on third-party invoices that are issued on behalf of a VAT-registered taxpayer.

Companies that are not based in the nation are barred from participating.

A system that has not yet been defined. GAZT has not yet defined the system and technological standards, however it is believed that e-invoicing solutions will fulfil the following requirements:

  • It must be accessible over the internet.
  • APIs (application programming interfaces) must be made available to external systems.
  • It is necessary to put in place control systems that ensure the validity and integrity of the information.
  • Must adhere to all applicable security and cybersecurity regulations in the country.

Once e-invoicing becomes required, the usage of invoices in PDF format, whether scanned or in any other format other than the structured file, will no longer be permitted.

Expected Timetables For The Implementation Of E-Invoicing

The Saudi Arabian tax office has defined two broad phases for the implementation of electronic invoicing. In the first step, there is a lot of planning, and the second part is the actual implementation of the new billing system.

The first phase of the e-invoicing legislation should be completed within 12 months after the approval of the law. Companies should be prepared to create electronic invoices, credit notes, and debit notes in a structured style. These papers must be created and kept electronically, and they must be generated using an electronic solution.

During Phase 2, all VAT-taxable businesses must begin producing and keeping electronic invoices, credit notes, and debit notes in order to justify the sale of products and services on December 4, 2021. In order to facilitate electronic information sharing, invoices will be issued using the GAZT system.

Further information on the requirements and processes for integrating an e-invoicing solution, as well as the implementation phases, will be made available no later than 180 days from the date of publication of the rule is published.

With the use of electronic invoicing, the country will be better able to combat the shadow economy and tax evasion. Also planned is to foster fairer market competition and consumer rights, therefore boosting Saudi Arabia’s standing in the international marketplace.

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