Saudi Arabia creates new Zakat, Tax and Customs Authority

The Saudi Cabinet approved a measure in May to merge the General Authority of Zakat & Tax (GAZT) with the General Authority of Customs to form an umbrella authority named the ‘Zakat, Tax and Customs Authority’ (ZTCA). The move forms part of Saudi efforts to restructure government agencies to speed the implementation of the ‘Vision 2030’ national transformation plan.

“Saudi Arabia’s newly formed ZTCA will boost security and enhance the business environment while facilitating trade and procedures for Zakat, taxes, and customs transactions,” said Minister of Finance Mohamed Al Jadaan. “The merger of the Zakat and customs entities will raise the integration level between the two sides and develop a unified platform that is based on modern technologies to save time and cost for customers.”

The move has enabled the Saudi government to launch a new E-invoicing (FATOORAH) initiative in August, which will contribute towards digital transformation in all public sector transactions as set out in the Kingdom’s Vision 2030.

Implementation of FATOORAH’S first stage, which requires the electronic issuance and storing of tax invoices and related debit and credit notices, will begin on 4 December this year. The second stage, which will consolidate integration between the electronic systems of taxpayers and the ZTCA, will be implemented in phases from the beginning of January 2022.

There are three main steps for taxpayers that are subject to the FATOORAH regulation. These are to stop handwritten invoices or issuing invoices manually. Secondly, to generate and store invoices electronically through a compliant e-invoicing system, which can be a cash register machine, a cloud system or an enterprise resource planning software (ERP). Thirdly, the simplified tax invoices must include a QR code and the VAT number of the buyer if the buyer is a registered VAT taxpayer.

ZTCA governor Suhail Abanmi said: “The FATOORAH project is in line with the latest developments in the world’s leading economies and will have a tangible impact on the national economy. The project will contribute to reducing the hidden economy transactions and promoting fair competition, in addition to contributing significantly to the efforts made by several government agencies to combat commercial concealment, apart from playing its essential role in enriching the consumer experience.”