E-invoicing (FATOORA): what phase two means for you

Two phases

Since 4 December 2021, every VAT-registered business in the Kingdom must issue its invoices electronically from a compliant system; handwritten invoices and invoices from simple text editors are no longer accepted. The second phase, integration, connects the invoicing system to ZATCA’s FATOORA platform so invoices are shared with ZATCA as they are issued.

How the integration waves work

• ZATCA brings companies into phase two in waves, by revenue, starting with the largest.
• Each wave is set by a revenue threshold. Wave 24 covered businesses with VAT-able revenue above SAR 375,000, with integration due by 30 June 2026.
• Wave 25, announced in July 2026, covers revenue above SAR 187,500 in any year from 2022 to 2025, with integration due by 1 February 2027. That reaches almost every VAT-registered business.
• ZATCA notifies each company directly, at least six months before its integration date. Check the ZATCA website for any later waves.

What your system must do

• Produce invoices in the required structured XML format, with the required fields in Arabic; a PDF/A-3 copy with the XML embedded can be shared with customers.
• Add a cryptographic stamp, a hash linking each invoice to the one before it, and a QR code on simplified invoices.
• Connect to FATOORA: tax invoices to businesses are cleared by ZATCA before they reach the customer, and simplified invoices to consumers are reported within 24 hours.
• Store invoices securely and keep them for the period the law requires.

How to prepare

• Confirm that your accounting or invoicing system has a ZATCA-compliant phase two solution, and what it costs.
• Clean your customer data: VAT numbers, names and addresses must be correct.
• Onboard each invoicing device or system on FATOORA and test it in the sandbox first.
• Train the people who issue invoices, credit notes and debit notes.

How we run it

We check our clients’ systems against the requirements, manage the onboarding with their software provider, and keep the invoice records reconciled with the VAT returns.