E-invoicing in Saudi Arabia (Fatoora): what Phase 2 means for your accounting system
By Al-Arjan9 min read
What is e-invoicing (Fatoora)?
E-invoicing in the Kingdom is supervised by the Zakat, Tax and Customs Authority (ZATCA). It means the tax invoice is issued and stored electronically in a structured format — not as a Word file, an image or a handwritten sheet.
It was rolled out in two phases: the generation and storage phase, which began on 4 December 2021, then the integration phase, which connects the entity’s system to the Fatoora platform. Phase 2 is applied in waves, and ZATCA notifies each wave at least six months before its date.
Who does Wave 25 cover, and when is the deadline?
On 24 July 2026 ZATCA announced the Wave 25 criteria: all entities whose VAT-subject revenue exceeded SAR 187,500 during 2022, 2023, 2024 or 2025. Targeted entities must integrate with the Fatoora platform by 1 February 2027 at the latest (ZATCA announcement).
In practice this threshold brings most VAT-registered small and medium entities into Phase 2 or close to it. ZATCA notifies each targeted entity directly, so watch your email and your account on the ZATCA portal.
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Get a quote in two minutesWhat must your accounting or POS system do in Phase 2?
According to ZATCA’s detailed e-invoicing guidelines, the system needs to: issue the invoice in structured XML, add the cryptographic stamp and QR code, onboard with the Fatoora platform to obtain the stamp certificate, then send invoices to the platform.
A standard tax invoice (business to business) is sent to the platform for clearance before it reaches the buyer, and a simplified invoice (to a consumer, such as a POS receipt) is reported to the platform within 24 hours of issue. The system must also handle credit and debit notes and invoices the platform rejects.
Standard versus simplified invoice in Phase 2
For
- Standard tax invoice:
- Between businesses (B2B)
- Simplified tax invoice:
- To consumers (B2C), e.g. POS
Platform handling
- Standard tax invoice:
- Clearance before reaching the buyer
- Simplified tax invoice:
- Reported within 24 hours
QR code
- Standard tax invoice:
- Required
- Simplified tax invoice:
- Required
Cryptographic stamp
- Standard tax invoice:
- Required
- Simplified tax invoice:
- Required
| Item | Standard tax invoice | Simplified tax invoice |
|---|---|---|
| For | Between businesses (B2B) | To consumers (B2C), e.g. POS |
| Platform handling | Clearance before reaching the buyer | Reported within 24 hours |
| QR code | Required | Required |
| Cryptographic stamp | Required | Required |
A ready-made system or a custom system with Fatoora integration?
If your operations are simple, a certified ready-made accounting package may be enough. If you run your own internal system — inventory across warehouses, special pricing, or branches with permissions — it is better to build Fatoora integration into that system, directly or through an integration provider, instead of entering invoices twice.
Before signing with any company, ask: how will onboarding and the stamp certificate be handled? What happens to a rejected invoice? Does the POS keep working offline and report later within the window? Who updates the system when the specification changes? The trade-off is in ready-made versus custom software.
How does Al-Arjan handle e-invoicing on Saudi projects?
Tax-invoice requirements and Fatoora integration are a core item in the analysis of any accounting and POS system or ERP we build for a Saudi company, and the project scope states how each requirement will be met and who pays any integration provider’s fees. Al-Arjan in Saudi Arabia covers the rest of what we offer in the Kingdom.
Frequently asked questions
When did e-invoicing start in Saudi Arabia?
The generation and storage phase began on 4 December 2021, then the Fatoora integration phase began in waves.
What is the Wave 25 revenue threshold?
SAR 187,500 of VAT-subject revenue in any year from 2022 to 2025, with integration due by 1 February 2027.
Is a QR code on the invoice enough?
Not in Phase 2: it also needs the structured format, the cryptographic stamp and submission to the Fatoora platform.