Tungsten Network is committed to supporting the upcoming e-invoicing mandate in Saudi Arabia and has produced this FAQ that provides insightful information on the requirements and how they would impact your invoice processing. It also presents how Tungsten’s services can assist you in ensuring a seamless transition.

ZATCA has announced that it will offer to subsidize the purchase of e-invoicing software. In order to submit a request, taxpayers must provide certain detailed information and the invoice they received from the e-invoicing service provider. The “E-invoicing Subsidy Request” form can be accessed on the taxpayer portal.

According to the Authority, the fines covered by the exemption include fines for late registration in all tax systems, late payment, late filing of returns fines in all tax systems, and fines to correct VAT returns, as well as fines for violations of VAT field control related to applying the e-invoicing regulations and other general regulations.

ZATCA encourages taxpayers to view the details of the schemes through the simplified guideline on its website and urges all taxpayers to benefit from the initiative during the allotted time.

The Saudi government has spent 1 trillion Riyals from the national reserves in the last five years. At the recent World Economic Forum 2022, the Minister of Finance, Mohammed al-Jadaan stated, “We will ultimately consider cutting the VAT but at the moment we are still replenishing the reserves”.

Additionally, the Minister has pointed out that the Kingdom is in the final stages of drafting its fiscal sustainability policy, which ensures the reverses do not fall below a certain percentage level of GDP.

ZATCA will begin to inform and communicate with the targeted taxpayers to complete procedures for implementing Phase Two (Integration Phase) of E-invoicing.

• When field violations are committed, ZATCA will issue a notice the taxpayers without issuing any penalties. However, if violation continues after the first notice, a fine of 1000 SAR will be imposed and the amount will increase gradually for further violations.
• Granting the violator an appropriate period of three months to correct the violation.
• Twelve months is the cut-off limit for a non-recurring violation by the violating taxpayer, provided that the violation is treated and not committed again within the twelve months.
• This decision will take effect from January 30, 2022.

In addition, ZATCA published a simplified guide providing more information on the reclassification of VAT violations and examples relevant in every use case.

Businesses who fail to issue and archive electronic invoices are subject to a fine between SAR 5,000- 50,000. In addition, the authority may issue a warning for not including the QR code on simplified tax invoices, not including the VAT registration number on the e-invoices where required, and failing to inform ZATCA of any malfunction that hinders the issuance of e-invoice. Amendment and deletion of e-invoices after issuance will also trigger a fine between SAR 10,000 – 50,000.

ZATCA has also clarified that all fines are applied depending on the types of violation and the number of times it has been committed. The penalties for first-time violations are likely to be modest, while repeat violations will attract higher fines.

A user manual is also available to guide users through the technical and functional aspects of the Compliance and Enablement Toolbox SDK such as what is the SDK, how to use it, and how to install it. To download the user manual and the SDK Toolkit, please access this page.

For the full guideline, please visit: QRCodeCreation.pdf (zatca.gov.sa). Note that the use of QR codes on Tax Invoices will become mandatory from 01/01/23. QR codes are required on Simplified Invoices from 04/12/2021.