If you run a small business in Saudi Arabia, ZATCA e-invoicing Phase 2 is probably coming for you soon. The 25th wave now covers businesses with taxable turnover above SAR 187,500 in any year from 2022 to 2025. The deadline to connect is 1 February 2027.
This guide explains what Phase 2 means in plain words, and gives you a checklist you can work through today.
Phase 1 vs Phase 2 in one minute
- Phase 1 (since 4 December 2021): you must create invoices electronically, with a QR code. No connection to ZATCA is needed.
- Phase 2 (integration): your invoicing software must connect to ZATCA's Fatoora platform and send invoice data to ZATCA.
ZATCA tells each business at least 6 months before its integration date. If your turnover passed SAR 187,500, watch your Fatoora account and email.
What Phase 2 requires
- Invoices in XML (UBL 2.1) or PDF/A-3 with embedded XML. Handwritten, Word, scanned or plain PDF invoices are not accepted.
- A unique ID (UUID), a cryptographic stamp and a hash chain linking each invoice to the one before it.
- A QR code on simplified (B2C) invoices.
- Your software registered with ZATCA using a CSID, created with an OTP from the Fatoora portal.
Clearance vs reporting
- Standard tax invoices (B2B / B2G): must be sent to ZATCA and cleared before you give them to your customer.
- Simplified tax invoices (B2C, e.g. shop sales): you give them to the customer straight away, and report them to ZATCA within 24 hours.
Penalties to know
Commonly reported fines (in SAR) include:
- Not issuing e-invoices: 5,000 to 50,000
- Not storing e-invoices: 5,000 to 40,000
- Changing or deleting invoices after issue: 10,000 to 50,000
- Missing QR code: a warning, then up to 40,000
- Not integrating by your deadline: 10,000 to 50,000
Always check the latest amounts on ZATCA's official website, as rules can change.
Your Phase 2 checklist
- Check your taxable turnover for 2022, 2023, 2024 and 2025. Above SAR 187,500 in any year? You are in wave 25.
- Log in to the Fatoora portal and confirm your notification and deadline.
- Make sure your VAT number, CR number and address are correct everywhere.
- Stop all handwritten, Word or Excel invoices.
- Choose invoicing software that can create XML/PDF-A3 invoices and connect to ZATCA.
- Generate an OTP in Fatoora and onboard each device or branch (CSID).
- Test standard (B2B) and simplified (B2C) invoices, including credit and debit notes.
- Train staff: no deleting or editing invoices after issue; use credit notes instead.
- Set up safe electronic storage and backups for your invoices.
- Finish everything well before 1 February 2027.
How OrbeeCash helps
OrbeeCash is a free-to-start accounting, invoicing, inventory and POS app for GCC small businesses. You can create VAT invoices with QR codes, track sales and stock, and keep all records in one place, in English or Arabic. Start free today and get your invoicing in order before your Phase 2 deadline.
Start free on OrbeeCash
FAQ
Does Phase 2 apply to my small shop?
If your taxable turnover was above SAR 187,500 in any year from 2022 to 2025, wave 25 covers you. ZATCA will notify you.
What is the wave 25 deadline?
1 February 2027.
Can I still use PDF invoices?
Only PDF/A-3 with embedded XML. A plain PDF is not enough.
What is a CSID?
A digital certificate that registers your invoicing software with ZATCA. You create it using an OTP from the Fatoora portal.
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