Electronic invoicing is now a core part of VAT compliance in Saudi Arabia. The Zakat, Tax and Customs Authority (ZATCA) introduced its e-invoicing programme, known as FATOORA, to replace paper and unstructured invoices with electronic invoices that follow a defined format and, in its second phase, are shared with ZATCA's systems.
This guide explains what each phase requires, how the integration phase works in practice, and the steps a business can take to prepare.
Who e-invoicing applies to
E-invoicing applies to taxpayers who are resident in Saudi Arabia and registered for VAT, and to any third party that issues tax invoices on their behalf. If your business is VAT registered in the Kingdom, the rules apply to the tax invoices and simplified tax invoices you issue, as well as to related credit and debit notes.
Phase 1: Generation
The first phase took effect on 4 December 2021. From that date, covered taxpayers must generate and store their invoices electronically using a compliant e-invoicing solution. In practice, this means:
Invoices must be produced by an electronic system in a structured format, not handwritten or created in an unstructured file such as a word processor document.
Invoices must contain the mandatory fields required by the VAT regulations.
Simplified tax invoices, typically issued to consumers, must include a QR code.
The solution must protect invoices from tampering and keep them available for record keeping.
Phase 2: Integration
The second phase began on 1 January 2023 and is being rolled out in waves. ZATCA selects taxpayers for each wave, largely based on revenue, and notifies them in advance of their integration date. Once a business is in scope, its e-invoicing solution must connect to ZATCA's FATOORA platform.
Integration works differently for the two main invoice types:
Clearance for tax invoices (B2B). Standard tax invoices are submitted to ZATCA for validation before they are shared with the buyer. The invoice is only valid once it has been cleared.
Reporting for simplified tax invoices (B2C). Simplified invoices are issued to the customer first and then reported to ZATCA within 24 hours.
Phase 2 also introduces technical requirements, including an XML format based on the UBL 2.1 standard, a cryptographic stamp, a unique identifier for each invoice and a hash that links each invoice to the previous one.
How to prepare for integration
Businesses that prepare early tend to have a smoother transition. A practical approach looks like this:
Watch for your notification. Keep your ZATCA portal details up to date so you receive the integration notice for your wave.
Map every invoicing flow. List all the systems and processes that issue invoices, credit notes and debit notes, including branches, e-commerce channels and manual workarounds.
Confirm your solution is compliant. Check whether your ERP, accounting or point-of-sale system supports Phase 2, or whether you need an upgrade or a specialist provider.
Review your master data. Customer VAT numbers, addresses and product data feed directly into invoices. Errors here cause rejected invoices once clearance is live.
Test before your go-live date. Use ZATCA's onboarding and compliance checks to confirm your invoices pass validation before you rely on them.
Train the team. Finance, sales and operations staff should understand what happens when an invoice is rejected and who resolves it.
Common pitfalls
Treating e-invoicing as an IT project only, without involving finance and tax.
Leaving manual or spreadsheet-based invoicing processes outside the new system.
Incomplete customer data that causes B2B invoices to fail clearance.
Not planning how credit notes, cancellations and corrections will be handled.
How Zento can help
Zento Solutions supports businesses with VAT and e-invoicing readiness, from reviewing invoicing flows and data to checking that invoices meet ZATCA's requirements. If you have received your integration notice, or want to prepare before you do, talk to our team.
This article is general guidance and not tax advice. ZATCA updates its rules and wave announcements over time, so confirm the current requirements for your business before acting.
