Intro
E-invoicing has become a recurring topic that we keep hearing about all over the news, media, and social platforms, with leading Middle Eastern countries expressing interest in adopting such an alternative, and others actually implementing it, such as the Kingdom of Saudi Arabia.
It’s nothing new under the sun that adapting to technological changes is the primary concern of countries right now, some have already replaced all traditional governing procedures with digitized ones to facilitate citizens’ lives and be in line with updates through full automation of processes and a reduced reliance on humans.
As a result, many countries have decided to follow in Saudi Arabia’s footsteps and join the tech wave of E-invoicing. These countries include Jordan, Oman, Egypt, Qatar, Bahrain, and the UAE. We’ll dig a bit deeper into each according to the information we have in our hands so far. However, first, let’s recap on E-invoicing in general and the reason countries follow this initiative.
A Brief About E-Invoicing
E-invoicing refers to the process of using a system to manage invoices electronically in a structured way. Implementing an E-invoicing system in your organization can bring you better results as it facilitates data management and invoice exchange, speeds up the invoice lifecycle, and keeps you in compliance with your country’s internal tax laws and regulations. Additionally, E-invoicing can help reduce operational costs, improve cash flow, and minimize the risk of fraud and errors.
What Motivates Governments to Choose E-Invoicing?
What motivates governments to take such actions? Quite a bit, to be honest. E-invoicing is crucial in mitigating tax evasion and increasing tax compliance for governments. Hence, this results in more accurate tax collection and better detection of frauds and manipulations as well as increased tax revenue.
E-invoicing has developed in response to the rapid digital transformation the world has been witnessing for decades now. That being so, to answer these persisting calls, many countries have decided to digitize as much as possible of their governing system, one of which is traditional invoicing systems, which makes sense as it provides them with in-depth knowledge of the financial transactions in the country thereby generating better national income analytics and reports.
E-invoicing has developed over time with the remarkable efforts of multiple countries, governments, businesses, and tech-powered solutions providers, and that’s what makes it an ongoing solution that has been developing and continues to do so but in accordance with each country’s VAT Regulations.
E-Invoicing in The Middle East
While the early starts have been witnessed in countries like Sweden, Finland, and Denmark, the early start in the Middle East was led by Saudi Arabia which took the first initiative to enforce E-invoicing for all sectors following a structured plan to keep the transformation process as neat as possible.
That being said, let’s take a look at the countries we expect to see implementing E-invoicing solutions very soon.
1- Saudi Arabia
- Rolled out in two phases, the Zakat, Tax, and Custom Authority (ZATCA) started the execution of E-invoicing in Saudi Arabia in two phases.
- Phase 1 known as the Generation Phase was rolled out on 4/12/2021 for all VAT taxpayers excluding residents.
- Phase 2 rolled out on 1/1/2023 for taxpayers with annual taxable revenue above a specific limit that is determined by the wave number.
- So far 8 waveshave been shared by ZATCA while the remaining ones will be announced in time.
- First wave:From 1/1 to 30/6, 2023.
- Second wave: From 1/7 to 31/12, 2023.
- Third wave: From 1/10, 2023, to 31/1, 2024.
- Fourth wave: From 1/11, 2023, to 29/2, 2024.
- Fifth wave: From 1/12, 2023, to 31/3, 2024.
- Sixth wave:From 1/1, 2023 to 30/4, 2024.
- Seventh wave: From 1/2, 2024 to 31/5, 2024.
- Eighth wave: From 1/3, 2024 to 30/6, 2024.
- All invoices must be integrated with the Fatoorah platform for the Second Phase.
- The issued invoice should follow a structured format set by ZATCA to be acceptable.
2- Jordan
- Rolled out in December 2022, by The ISTD.
- Similar to Saudi Arabia, the system is mandatory and will be executed on different stages that cover different groups and sectors.
- The groups will be divided according to the size, type, and revenue of the organization.
- Organizations can use an E-invoicing system like InvoiceQ or integrate directly with the National E-Invoicing System.
- As of now, the categorization of groups is still ongoing till it ultimately covers all industries and sectors.
3- Oman
- The Sultanate of Oman Tax Authority has officially stated through a formal request for information RFI.
- The launch of the E-invoicing system will be voluntary at the start and gradually become mandatory.
- The voluntary period is estimated between April and September 2024.
- The mandatory period is to be enforced right after the voluntary period is done.
4- Bahrain
- The National Bureau for Revenue (NBR) announced in a tender posted about its interest in joining the E-invoicing wave and receiving support from experts in the field to ensure a perfect execution.
- In 12/2023 the request for proposal (RFP) shared by the (NBR) highlighted the main goal which is “a system that receives and validates e-invoicing data obtained from businesses’ integrated e-Invoicing solutions”.
- The NBR’s E-Invoicing Central Platform must be integrated with businesses’ E-invoicing solutions once the system is live.
- Verification of the invoice data of all registered businesses to detect non-compliance.
5- United Arab Emirates – UAE
- The exact dates have not been confirmed yet but it is expected to follow the same approach Saudi Arabia has done in terms of creating different phases.
- The expected dates for the phases are July 2025 and July 2026.
- Once mandatory, invoices must only be created and distributed electronically, and electronic signatures must be used. A ten-year electronic storage period is also required for these documents.
- The exchange of electronic commercial papers is currently permitted, provided that the recipient agrees to receive them in the format that was chosen along with the issuer.
- Although the mandatory phase has not been implemented yet, the voluntary phase has already started for those who are interested.
6- Qatar
- Businesses can voluntarily create electronic invoices at the moment.
- All tax E-invoices must be regulated with VAT regulations to be valid.
- The E-invoice should be available to the buyer within 24 hours and to the Qatar Tax Authority (QTA) within 48 hours of the sale.
- Businesses issuing E-invoices are required to register with the QTA.
- Businesses that issue E-invoices must use a certified E-invoicing provider.
- The effective date is still not confirmed.
7- Egypt
- The full implementation will be in 2024.
- Similar to Saudi Arabia the transformation process has been implemented in different phases.
- The First Phase covered 134 companies and was rolled out in November 2020.
- The Second Phase in February 2021, covering 350 companies.
- The Third Phase rolled out in 2021 and required all remaining companies to be enrolled in the Large Taxpayers Centre.
- The Fourth Phase mandated E-invoicing for the public sector in July 2021.
- The Fifth and sixth Phase started in February 2022 and were followed by the Seventh Phase in June 2022.
- Invoice should be issued through trusted service providers only and adhere to the format listed.
- July 2023 is the official date by which E-invoicing will be mandatory for all businesses to connect with the tax authority.
It’s only a matter of time until Invoicing solutions are digitized all across the Globe, but you can always start early and be prepared before it’s time with InvoiceQ ‘s solutions!
