The Zakat, Tax and Customs Authority (ZATCA) of the Kingdom of Saudi Arabia has announced the following phases of VAT integration implementation.
PHASE 1. Implementation as of December 4th, 2021: It is also known as the Generation Phase and required businesses to generate and store tax invoices and notes through electronic solutions. By electronic solution the ZATCA meant that all sales and purchases by the business should be through a proper software. ZATCA clearly states that electronic invoicing is a procedure that aims to convert the issuing of paper invoices and notes into an electronic process that allows the exchange and processing of invoices, credit notes & debit notes in a structure electronic format between buyer and seller through an integrated electronic solution. The software should be able to print invoices with a unique QR code. The QR Code should be easily readable by the ZATCA app or other similar applications.
PHASE 2. Implementation as of January 1st, 2023 Phase 2 is also known as "The Integration Phase". In this phase the business software is to send the invoice data to the ZATCA portal upon its submission. Due to various business sizes, the ZATCA rolled out phase 2 gradually by assigning time frame for business based on their respective annual revenue. This timeframe hence is referred as "WAVES". As of 10 Aug 2024, the Saudi Arabia Zakat, Tax and Customs Authority (ZATCA) has rolled-out 13 waves with more to be announced in future.
In addition to the Phase 1 (Generation Phase) phase 2 involves the business to integrate their electronic solutions with the Saudi Arabia Zakat, Tax and Customs Authority (ZATCA) systems. Usually, the Saudi Arabia Zakat, Tax and Customs Authority (ZATCA) notifies taxpayers of Phase 2 waves at least six months in advance.
