Saudi Arabia's e-invoicing programme, known as Fatoora, is run by the Zakat, Tax and Customs Authority (ZATCA). Phase 1 required electronic invoice generation. Phase 2, the integration phase, connects your invoicing systems directly with ZATCA. Here's what that means in practice.
Who has to comply, and when
ZATCA brings VAT-registered businesses into Phase 2 in waves, based on revenue thresholds, and notifies each group in advance. Your notification gives your integration deadline. Thresholds have been lowered wave by wave, so more SMEs are now included.
Clearance and reporting
Phase 2 treats the two main invoice types differently.
- Standard tax invoices (B2B): sent to ZATCA for clearance before they're shared with the buyer
- Simplified tax invoices (B2C, such as POS receipts): issued to the customer, then reported to ZATCA within 24 hours
What your system must do
- Generate invoices in the required XML format
- Add a unique identifier, cryptographic stamp and hash linking to the previous invoice
- Print a QR code on simplified invoices
- Be onboarded to ZATCA through the Fatoora portal
- Handle credit and debit notes the same way
- Store invoices and manage rejections
How to prepare
- List every system that issues invoices: ERP, POS, billing apps, e-commerce
- Ask each vendor for a written Phase 2 compliance confirmation and timeline
- Plan onboarding of each device or system
- Test standard, simplified, credit note and error scenarios
- Update finance procedures for rejected invoices
Key takeaway
Treat Phase 2 as an integration project with a fixed deadline. Start with an inventory of every invoicing point, then hold each vendor to a dated plan.
ZATCA requirements and wave dates change. Confirm current rules on zatca.gov.sa before implementation.
