Saudi Arabia was the first GCC country to make e-invoicing mandatory. Phase 1 has applied to every VAT-registered business since December 2021, and Phase 2 is being rolled out wave by wave. If your wave notification has arrived — or is likely soon — here is what to plan for.
Two phases, one goal
Phase 1 — Generation (from 4 December 2021) requires invoices to be generated and stored electronically by a compliant solution, with a QR code on simplified invoices. Handwritten and editable invoices are no longer acceptable.
Phase 2 — Integration (in waves since 1 January 2023) connects your invoicing system directly to ZATCA's FATOORA platform, adds cryptographic stamping, and introduces clearance and reporting.
How the waves work
ZATCA brings taxpayers into Phase 2 in groups, or "waves", based on their VAT-taxable revenue in a reference period. Each new wave lowers the revenue threshold, so over time the requirement reaches smaller and smaller businesses.
ZATCA notifies each taxpayer directly, at least six months before its integration date — which gives you a fixed window to prepare.
"Your wave notification starts a six-month clock. Most of that time goes on integration and testing, not paperwork."
Clearance versus reporting
| Invoice type | Typical use | Phase 2 requirement |
|---|---|---|
| Standard tax invoice | Business-to-business | Cleared by ZATCA before it is shared with the buyer |
| Simplified tax invoice | Business-to-consumer | Shared with the customer, then reported to ZATCA within 24 hours |
| Credit and debit notes | Corrections | Follow the same route as the invoice they adjust |
What changes technically
- XML format — invoices are generated in UBL 2.1 XML (a PDF/A-3 with embedded XML can be shared with customers).
- Cryptographic stamp — each invoicing unit is onboarded with a Cryptographic Stamp Identifier (CSID), and every invoice is stamped.
- Invoice chain — each invoice carries a unique identifier, a counter and the hash of the previous invoice, making tampering detectable.
- QR code — enhanced QR codes carry more data, including the stamp.
Plan for rejections
A standard invoice that fails clearance cannot be issued until it is corrected. Agree who fixes rejected invoices, and how quickly, before you go live — otherwise billing can stall.
Phase 2 readiness checklist
ZATCA Phase 2 readiness
0 / 6Key takeaway
Test against ZATCA's simulation environment with real invoice scenarios — returns, discounts, multi-currency — not just a single happy-path invoice.
Key takeaways
- Phase 1 (generation) applies to all VAT-registered businesses; Phase 2 (integration) is rolled out in waves.
- ZATCA gives at least six months' notice before your integration date.
- Standard invoices need clearance before issue; simplified invoices are reported within 24 hours.
- Plan CSID onboarding, XML generation and rejection handling early.