e-Invoicing in GCC Countries

Many countries across the globe are moving towards digitalisation to introduce a paperless environment. Amid this, the countries started implementing e-invoicing regulations to compensate for the loss of tax revenue due to the pandemic and curb tax evasion.

Also, the countries that implemented e-invoicing witnessed improvements in VAT collections. Hence, the administrations started following this trend of mandating e-invoicing for all businesses.

Keeping the global best practices in view, the GCC VAT implementing Countries are moving forward by introducing e-invoicing to streamline economic activity & check tax evasion. Currently, Saudi Arabia (SA) is the first Nation in the GCC to implement the e-invoicing initiative.

e-Invoicing in the Kingdom of Saudi Arabia (KSA)

The Kingdom of Saudi Arabia (KSA) government started focusing on digitalising the economy. The Zakat, Tax and Customs Authority (ZATCA), earlier known as the General Authority of Zakat and Tax (GAZT), intended to introduce e-invoicing in Saudi Arabia and published a draft amendment on 17th September 2020. 

ZATCA intended to implement e-invoicing in two phases. Accordingly, it implemented phase 1 w.e.f 4th December 2021 and is planning to implement phase 2 in waves starting from 1st January 2023. on 24th June 2022, ZATCA notified that the VAT taxpayers with turnover of more than SAR 300 billion in 2021 fall under the first wave and must implement phase 2 of e-invoicing from 1st January 2023.

e-Invoicing in the United Arab Emirates (UAE)

With the KSA implementing e-invoicing w.e.f 4th December 2021, the United Arab Emirates (UAE) has also indicated its plans to mandate the system. Currently, the UAE government has given legal recognition to e-invoices.

Sooner or later, the Federal Tax Authority (FTA) shall make e-invoicing in UAE mandatory following KSA methods. It is expected that the government will release guidelines on e-invoicing soon.

e-Invoicing in Bahrain

The National Bureau for Revenue (NBR) of Bahrain has invited comments to support the review and enhancement of the legal framework to launch e-invoicing in Bahrain. It can be understood that Bahrain would be following other GCC countries that have implemented e-invoicing.

e-Invoicing in Bahrain applies to VAT-registered businesses and third parties issuing tax invoices on behalf of other taxable persons. The e-invoicing applicability may vary depending nature of the business, number of transactions, annual turnover etc. Also, NBR may adopt a phased approach to make the largest businesses or certain industries comply with e-invoicing.