ZATCA E-Invoicing Phase 2: A Simple Guide for Businesses
E-invoicing (Fatoora) is mandatory for VAT-registered businesses in Saudi Arabia and is being rolled out in two phases. This guide explains the difference between the phases, what Phase 2 asks of you, and how to get ready before your integration date.
What is an e-invoice?
An e-invoice is issued and stored in a structured electronic format by a system that meets the requirements of the Zakat, Tax and Customs Authority (ZATCA), instead of paper or handwritten invoices. Credit and debit notes are covered too.
Phase 1: Generation
Phase 1 started on 4 December 2021. Businesses must issue and store their invoices with a compliant electronic system, add a QR code to simplified invoices, and include the required fields such as the seller's VAT number, the invoice date and time, the total and the VAT amount.
Phase 2: Integration
Phase 2 started on 1 January 2023 and is applied in waves. ZATCA notifies each targeted business of its integration date at least 6 months in advance. In this phase your invoicing system connects to ZATCA's Fatoora platform, and what happens depends on the invoice type:
| Invoice type | Issued to | What happens in Phase 2 |
|---|---|---|
| Tax invoice | Businesses (B2B) | Clearance: sent to ZATCA and cleared first, then shared with the buyer. |
| Simplified tax invoice | Consumers (B2C) | Reporting: given to the customer straight away and reported to ZATCA within 24 hours at most. |
Key technical requirements
- Invoices are generated and stored as XML, or as PDF/A-3 with the XML embedded.
- A cryptographic stamp on invoices to protect them from tampering.
- A QR code with the seller's name and VAT number, the invoice date and time, the total including VAT and the VAT amount.
- Every device or system that issues invoices is onboarded to the Fatoora platform.
How to get ready for Phase 2
- Check your system: use Phase 2-compliant software from a solution provider on the list ZATCA publishes.
- Onboard your devices: in the Fatoora portal you generate a one-time password (OTP) and enter it in your system within its validity window to onboard the device.
- Review your data: your VAT number, your national address and your business customers' details, which tax invoices require.
- Train your team: on issuing invoices and credit and debit notes correctly.
- Start early: don't wait until the last week. Test issuing and sending invoices and make sure everything works.
For official details and updates, see the ZATCA website.