ZATCA announces criteria for selecting taxpayers in fourth wave of e-invoicing

On 28 April 2023, the Zakat, Tax and Customs Authority (ZATCA) announced the criteria for selecting resident taxpayers for the fourth wave of the e-invoicing integration phase.

Key considerations for taxpayers as per the announcement 

• Resident taxpayers who reported taxable revenue of more than SAR 150 million in VAT returns filed for the calendar year 2021 or 2022 will be required to integrate their e-invoicing systems with ZATCA for clearance or reporting of e-invoices.
• For the fourth wave of resident taxpayers, the integration will go live with the ZATCA Fatoora Portal starting from 1 November 2023, giving them at least six months to comply with the integration phase requirements.

Based on our experience, ZATCA will officially notify selected taxpayers about the timeline for the fourth wave. Given that this wave was announced around a month after the third wave, it is likely that subsequent waves will be announced soon. 

Therefore, taxpayers who have not been included in the previous waves should plan ahead as they may be included in the upcoming ones, and timely ZATCA integration requires significant IT and human resources. 

Background on e-invoicing in KSA 

In 2020, ZATCA introduced e-invoicing in KSA to be implemented across two phases:

1. The generation phase (phase 1)
2. The integration phase (phase 2)

The generation phase of e-invoicing, effective on 4 December 2021, requires resident taxpayers to generate and store electronic invoices in a structured format.  The integration phase of e-invoicing requires resident taxpayers to integrate their IT system with ZATCA for tax invoice/note clearance or reporting.  

The roll-out has so far covered the following taxpayers: 

1. First wave: Taxpayers exceeding 3 billion in 2021 VAT returns, live since 1 January 2023
2. Second wave: Taxpayers exceeding 500 million in 2021 VAT returns, effective from 1 July 2023
3. Third wave: Taxpayers exceeding 250 million in 2021 or 2022 VAT returns, effective from 1 October 2023.

Furthermore, taxpayers who are not currently being selected for the integration phase will be notified in the upcoming waves. However, they can request to be enrolled for early adoption by contacting their ZATCA relationship manager.