Phase 2, known as the Integration phase, involves integrating electronic invoicing solutions with ZATCA’s systems to ensure real-time data transmission and compliance with specific technical and business requirements.

Phase 2 started on January 1, 2023, and is being rolled out in waves to different groups of taxpayers.

All taxpayers subject to VAT, excluding non-resident taxpayers, must comply with Phase 2 requirements.

The main requirements include integrating electronic invoicing solutions with ZATCA’s systems, issuing invoices in a secure electronic format, and ensuring real-time data transmission to ZATCA.

Businesses should ensure their electronic invoicing solutions are compliant with ZATCA’s requirements, integrate them with ZATCA’s systems, and train their staff on the new processes.

All tax invoices, credit notes, and debit notes must be issued electronically and comply with the specified technical standards.

Non-compliance may result in penalties as per ZATCA’s regulations, which can include fines and other administrative actions.

Phase 2 enhances the accuracy, efficiency, and security of the invoicing process by ensuring real-time integration with ZATCA’s systems, reducing errors, and preventing fraud.

Technical specifications include using secure electronic formats, unique invoice identifiers, and ensuring real-time data transmission to ZATCA’s systems.

Businesses must use e-invoicing software that meets ZATCA’s compliance requirements and can integrate with ZATCA’s systems.

ZATCA will notify businesses at least six months in advance of their Phase 2 wave, providing sufficient time for preparation and compliance.

Benefits include improved compliance, reduced errors, faster processing, enhanced security, and better data management.

Non-resident taxpayers are exempt from Phase 2 requirements, but all other VAT-registered businesses must comply.

Businesses can consult ZATCA’s guidelines, seek certification from authorized providers, and ensure their solutions meet all technical and business requirements.

ZATCA provides educational resources, guidelines, and support through their website and customer service channels to assist businesses in transitioning to Phase 2.

Phase 2 ensures accurate and timely VAT reporting by integrating electronic invoicing with ZATCA’s systems, facilitating real-time data exchange.

Electronic invoices must include detailed transaction data, unique identifiers, secure formats, and comply with ZATCA’s technical specifications.

No, all invoices must be issued electronically under Phase 2 to ensure compliance with the new regulations.

Cross-border transactions must also comply with Phase 2 requirements if they are subject to VAT, ensuring consistency and compliance.

Phase 1 focused on generating and storing electronic invoices, while Phase 2 emphasizes real-time integration with ZATCA’s systems and compliance with additional technical requirements.