The integration phase of Saudi e-invoicing is rolling out in waves through 2023 and beyond. Compliance is a systems question, but the reconciliation burden lands on finance.
Key takeaways
- Confirm your wave date from ZATCA's notification; each wave is triggered by VAT-registered revenue thresholds.
- Every invoice type has a clearance or reporting path; credit notes issued outside the system are the most common gap.
- Reconcile e-invoice data to the VAT return every period, before ZATCA does it for you.
The first phase of Saudi e-invoicing, the generation phase, has applied since December 2021 and required taxpayers to issue invoices electronically with prescribed content. The second phase, integration, requires invoices to be generated in the prescribed XML format, cryptographically stamped and either cleared through the ZATCA platform before issuance (standard tax invoices) or reported within 24 hours (simplified invoices). ZATCA is enrolling taxpayers in waves based on VAT-registered revenue, starting with the largest in January 2023 and working down.
Before your wave date
- Confirm the wave you fall into and the date from ZATCA's notification, and treat it as a hard deadline. Notifications are issued at least six months before the integration date.
- Verify that your invoicing solution is compliant for Phase 2. Many systems that handled Phase 1 require an upgrade or an add-on for XML generation, stamping and API integration. Ask the vendor for evidence of successful onboarding for other taxpayers.
- Complete the onboarding of your solution units on the FATOORA portal, including certificate issuance. Allow time for the compliance checks to fail once or twice.
- Map every document type you issue to its path: standard tax invoices and their credit and debit notes to clearance; simplified invoices and their notes to reporting. Self-billed invoices and third-party billing need their own configuration.
The gap that catches most companies
Credit notes. Sales invoices are almost always generated in the system, but credit notes, rebates, returns and price adjustments are often raised manually, in spreadsheets, or in a different module. In the integration phase any credit note not cleared or reported through the platform is non-compliant, and, because ZATCA holds the invoice data, the difference between reported e-invoices and the VAT return becomes visible. In our experience this is the single most frequent cause of ZATCA queries after integration.
After integration: reconcile every period
The VAT return should be prepared from the ledger and reconciled to the e-invoice data submitted to ZATCA for the same period, invoice by invoice for output tax, before it is filed. Differences, such as invoices cleared but not posted, or posted but rejected by the platform, must be resolved. Keep the reconciliation and the evidence in a filing file for each period. A taxpayer who can produce that file when a query arrives resolves it in days; one who cannot may spend months.