ZATCA E-Invoicing Phase 2: Who Must Integrate and When

If your business's VAT-able revenue passed SAR 187,500 in any single year from 2022 to 2025, it is most likely in Wave 25, and your invoicing system must be connected to ZATCA's Fatoora platform on 1 February 2027. That is about 13 weeks from today. This guide explains ZATCA e-invoicing phase 2 in plain business terms: who must integrate, what a compliant invoice carries, a dated readiness checklist, and the mistakes and fines to avoid.

What is ZATCA e-invoicing Phase 2?

Phase 2, officially the "Integration Phase", means your invoicing system no longer just creates and stores invoices: it connects to ZATCA's Fatoora platform and sends it every invoice in a set format. It has been rolled out in waves since 1 January 2023, following Phase 1, the "Generation Phase", which became mandatory on 4 December 2021.

Put simply, Phase 1 ended handwritten invoices and invoices typed up in Word or Excel. You had to issue them from a compliant electronic system. Phase 2 puts ZATCA in the loop: the authority sees and validates each invoice, either before your customer receives it or within a day of issue.

Source: ZATCA's Detailed Guidelines for E-Invoicing.

Who must comply with Phase 2, and how do the waves work?

Every taxpayer that falls into a Phase 2 wave must integrate, and waves are defined by revenue subject to VAT in specific years. ZATCA started with the largest businesses and lowered the threshold with each wave. It notifies each wave directly at least six months before its integration date, using the email addresses and mobile numbers registered with it.

ZATCA announced the Wave 25 criteria on 24 July 2026; the Wave 24 criteria are in its earlier Wave 24 notice. The two thresholds are not random. SAR 375,000 is the mandatory VAT registration threshold and SAR 187,500 is the voluntary one. In practice, Wave 25 reaches the small VAT-registered businesses that earlier waves missed, including many that registered voluntarily.

Is my business in Wave 25?

Answer three questions:

1. Is your business VAT-registered and resident in Saudi Arabia? Being foreign-owned does not take a Saudi-registered company out of scope.
2. Did your VAT-able revenue exceed SAR 187,500 in at least one year from 2022 to 2025? One year is enough, even if revenue fell afterwards.
3. Have you received a ZATCA notice? If not, check that the email and mobile number on your ZATCA account are current, because that is where it goes.

If you answered yes to the first two, treat 1 February 2027 as your date and start preparing now rather than waiting for the notice.

What if I passed SAR 375,000 and still haven't integrated?

If your revenue passed SAR 375,000 in 2022, 2023 or 2024, you are in Wave 24, whose date of 30 June 2026 has already gone. Don't wait any longer: contact your system provider this week, complete the integration, and check your ZATCA account for notices.

And if my revenue is below SAR 187,500?

The Wave 25 criterion doesn't apply to you, but Phase 1 rules still do if you are VAT-registered. That means electronic invoices from a compliant system, a QR code on simplified invoices, and no handwritten invoices. ZATCA notifies any later wave at least six months before its date.

What does a Phase 2 compliant invoice need?

A Phase 2 invoice is an XML file (or a PDF/A-3 with the XML embedded) issued by a system onboarded on Fatoora. Beyond the usual VAT details, it carries security elements that make tampering visible. You don't need to master the technology, but you should know what to ask your provider about:

ZATCA's guideline also bans certain functions outright. An invoicing system must not let anyone delete or edit an invoice once issued; you cancel with a credit note and issue a new invoice. It must not allow anonymous access or a default password, and it must log every user's activity.

Tax invoice or simplified invoice: what changes in Phase 2?

The difference is when ZATCA sees the invoice:

• Tax invoices (B2B and B2G): your system sends each one to Fatoora for real-time clearance. Fatoora validates it, adds the cryptographic stamp and QR code, and only then is it shared with the buyer.
• Simplified invoices (mostly B2C): your system stamps the invoice itself, hands it to the customer, and reports it to Fatoora within 24 hours.

You may issue a simplified invoice to a business customer when the supply is under SAR 1,000. So a shop that sells to both walk-in customers and companies, such as a building-materials store or a wholesaler, needs a system that handles both routes cleanly.

How do you prepare for Fatoora integration, step by step?

Start now. The onboarding step itself is short, but the work around it takes weeks: checking your figures, waiting for your provider's update, registering devices, testing invoices and training staff. Here is the checklist, in order:

1. Work out your position in numbers. Pull your VAT-able revenue for each year from 2022 to 2025 from your returns. Not profit, and not the VAT amount. If your returns are not up to date, see our guide to VAT return filing in Saudi Arabia.
2. Update your contact details on your ZATCA account so the wave notice reaches you.
3. List everything that issues invoices: tills in every branch, tablets, accounting software, booking or ordering systems. Every device issuing invoices under your VAT number must be onboarded.
4. Ask your provider, in writing: does your system integrate with Fatoora for Phase 2 today? Does it handle both clearance and reporting? Who does the onboarding and testing? What will the update cost? ZATCA's Solution Providers Directory lists providers, though ZATCA says a listing is not an approval of the solution.
5. Clean your master data: VAT numbers for your business customers, your full National Address, and the correct VAT rate on every item.
6. Onboard your devices on Fatoora: log in at fatoora.zatca.gov.sa, choose "Onboard new solution unit/device", select "Generate OTP Code", and enter the code in your invoicing system.
7. Test before the date: issue tax invoices, simplified invoices and credit notes, and read Fatoora's responses. Each comes back accepted, accepted with warnings (a missing building number, say), or rejected for a missing mandatory field or wrong VAT.
8. Train your team on three things: cancel with a credit note, never by deleting; capture the buyer's VAT number on B2B sales; and know what to do when the internet drops.
9. Agree an outage plan, as ZATCA's guideline describes it:
   • If Fatoora is down: give the customer the invoice and resubmit when the service is back.
   • If your internet is down: report the failure to ZATCA, give the customer the invoice, and resubmit once you are connected.
   • If power fails or a device breaks: report it to ZATCA, keep trading, and regenerate the invoices once fixed.
10. Archive your invoices as XML or PDF/A-3, on a server in Saudi Arabia or in the cloud, in line with VAT record-keeping rules.

A suggested split of the weeks that remain:

Warning: if you invoice from more than one system, for example a till in the shop and accounting software for project invoices, both must be compliant and integrated.

Which mistakes delay integration or lead to fines?

The costliest mistakes are rarely technical. They are wrong assumptions and leaving it late. Watch for these ten:

• "We're too small to be included." The test is VAT-able revenue, not company size, and one year above SAR 187,500 is enough.
• Using profit instead of revenue. The threshold is measured on revenue subject to VAT.
• Waiting for a notice that goes to an old inbox or a mobile number nobody uses.
• Onboarding only the main till and forgetting the second branch or the tablet.
• Trusting a "ZATCA-approved" sales pitch. Ask for proof that the system integrates with Fatoora today, and test it with your own invoices before you sign.
• Deleting or editing an invoice instead of issuing a credit note.
• Leaving the buyer's VAT number blank on B2B invoices.
• Not telling ZATCA about a malfunction that stops you issuing invoices.
• Falling back to Excel or paper on busy days or during outages.
• Starting in the last week of January.

What are the penalties for e-invoicing violations?

ZATCA applies fines by the type of violation and how often it is repeated, and some violations start with a warning. These are the starting points it published when e-invoicing began:

Source: ZATCA's announcement of e-invoicing violations and fines. These are starting penalties and they rise with repetition, so check ZATCA's full schedule before relying on any figure.

Is Manzomia's POS integrated with Fatoora?

Not yet. Manzomia, our Arabic cloud system for sales, inventory, HR and payroll, is live at manzomia.com and issues tax invoices that show VAT and your VAT number clearly. Integration with Fatoora is still in development and listed on our site as "coming soon". We will announce it when it is complete.

So if your integration date is 1 February 2027, don't plan around a feature that hasn't shipped: use a system that integrates with Fatoora today. You can see what the Manzomia retail POS offers now. And through our Tax and VAT Services, we review your revenue and position, build a readiness plan around your mandated date, and prepare your business with a compliant invoicing system.

Your next step before 1 February 2027

You have roughly 13 weeks. This week, work out your revenue for each year, then send your provider the four questions in step 4. Manzomia is itself a foreign-owned, MISA-licensed company in Riyadh. We went through setting up in the Kingdom ourselves, and we know how deadlines pile up on a business owner.

If you would like someone to review your position and build the readiness plan with you, book a consultation with our team, request a quote for our Tax and VAT service, which starts from SAR 1,200 one-time, or send your business type and approximate sales through our contact page.