E-Invoicing KSA

Electronic invoicing is now an essential compliance requirement for VAT-registered businesses operating in Saudi Arabia. Under the Zakat, Tax and Customs Authority (ZATCA) framework, businesses subject to the E-Invoicing Regulation must generate, store, and, where applicable, integrate electronic invoices with ZATCA’s FATOORA platform using a compliant invoicing solution.

At Eighty20 Business & Financial Solutions, we help businesses understand, prepare for, and manage e-invoicing KSA requirements from initial compliance assessment through system readiness, invoice review, Phase 2 integration support, and ongoing ZATCA e-invoicing compliance.

Whether you are already generating electronic invoices or have received a Phase 2 integration notification from ZATCA, our team helps identify compliance gaps and coordinate your accounting, tax, and invoicing processes with the applicable Saudi requirements.

What Is E-Invoicing in Saudi Arabia?

Saudi e-invoicing, officially known as FATOORA, is the electronic process of generating and processing tax invoices, simplified tax invoices, credit notes, and debit notes using a compliant electronic invoicing solution.

An electronic invoice is not simply a paper invoice scanned into PDF format. Under ZATCA’s framework, an e-invoice must be generated electronically in the required structured form using a compliant system.

ZATCA defines electronic invoicing as a process that converts the issuance of paper invoices and notes into an electronic process that allows invoices and associated notes to be exchanged and processed in a structured electronic format.

This means businesses need to consider not only how an invoice looks, but also:

• How invoice data is generated
• Whether mandatory fields are included
• How invoice records are stored
• Whether the invoicing solution meets ZATCA technical requirements
• Whether invoices need clearance or reporting
• How the system integrates with the FATOORA platform
• How invoice sequences and records are protected from alteration

Who Must Follow Saudi Arabia E-Invoicing Requirements?

Phase 1 of Saudi e-invoicing applies to taxpayers subject to the E-Invoicing Regulation, including VAT taxpayers resident in Saudi Arabia, except non-resident taxpayers, as well as other parties issuing tax invoices on behalf of VAT-registered suppliers.

Phase 1 became effective on 4 December 2021.

Phase 2 applies progressively to targeted taxpayer groups according to waves announced by ZATCA. Businesses selected for a Phase 2 wave receive notification from ZATCA before their required integration date.

You May Need Our E-Invoicing Support If:

• Your company is VAT registered in Saudi Arabia
• You issue B2B tax invoices
• You issue B2C simplified tax invoices
• You operate multiple branches, stores, or POS systems
• You use ERP or accounting software for invoicing
• ZATCA has notified your business about Phase 2
• Your current invoicing system has not been reviewed for Phase 2
• Your business needs FATOORA integration support
• Your invoice XML files are failing ZATCA validation
• Your finance and IT teams need assistance coordinating compliance

What Are the Two Phases of ZATCA E-Invoicing?

Saudi Arabia introduced ZATCA e-invoicing through two main implementation phases.

Requirement	Phase 1 – Generation Phase	Phase 2 – Integration Phase
Effective date	4 December 2021	From 1 January 2023 in waves
Main requirement	Generate and store electronic invoices through a compliant solution	Integrate the invoicing solution with ZATCA’s FATOORA platform
Manual invoices	Not permitted for affected taxpayers	Not permitted
Electronic solution	Required	Required and capable of ZATCA integration
Invoice format	Generated electronically	Required structured electronic format
Additional invoice fields	Required	Additional Phase 2 fields required
Integration with ZATCA	Not required	Required for taxpayers once their wave applies
Tax Invoice / B2B	Generated electronically	Subject to ZATCA clearance before being shared with the customer
Simplified Tax Invoice / B2C	Generated electronically	Reported to ZATCA within the prescribed period
Technical security controls	Basic Phase 1 controls	Enhanced technical, cryptographic and integration requirements

ZATCA describes Phase 1 as the Generation Phase and Phase 2 as the Integration Phase. Phase 2 introduced additional technical and business requirements and integration between taxpayers’ electronic invoicing solutions and ZATCA’s systems.

Phase 1: Generation of Electronic Invoices

Phase 1 has been mandatory since 4 December 2021.

Businesses subject to the regulation must use an electronic invoicing solution capable of generating and storing compliant tax invoices, simplified tax invoices and related electronic notes.

Key Phase 1 Requirements

Businesses generally need to:

• Stop issuing handwritten invoices
• Stop creating invoices solely through text-processing or spreadsheet software where those methods do not constitute a compliant e-invoicing solution
• Generate invoices electronically
• Include applicable mandatory invoice fields
• Generate QR codes where required
• Store electronic invoices appropriately
• Prevent prohibited functions such as uncontrolled invoice alteration
• Maintain appropriate invoice sequencing and records

ZATCA specifically states that handwritten invoices and invoices created merely through text-editing tools are not considered compliant electronic invoices for Phase 1 purposes.

Phase 2: Integration With ZATCA’s FATOORA Platform

Phase 2 introduced direct system integration with ZATCA.

It began on 1 January 2023 and is being implemented in waves based on criteria announced by ZATCA.

Once a taxpayer becomes subject to an applicable Phase 2 wave, its e-invoicing solution must meet the additional Saudi Arabia e-invoicing requirements applicable to the Integration Phase.

These include:

• Integration with the FATOORA platform
• Structured invoice generation
• Required XML data
• Additional invoice fields
• Cryptographic controls
• Invoice hash requirements
• QR code requirements
• Secure solution onboarding
• Clearance of applicable tax invoices
• Reporting of simplified tax invoices
• Internet connectivity for integration
• Appropriate invoice storage and archiving

ZATCA’s implementation rules require Integration Phase systems to be capable of connecting to external systems using the APIs specified by ZATCA.

Latest ZATCA Phase 2 Rollout Update for 2026

The Integration Phase continues to expand in waves.

As of July 2026, ZATCA had announced its 25th wave.

Wave 25 covers taxpayers whose revenues subject to VAT exceeded SAR 187,500 during 2022, 2023, 2024, or 2025.

Taxpayers targeted under Wave 25 are required to integrate their electronic invoicing solutions with the FATOORA platform no later than 1 February 2027, following notification from ZATCA.

ZATCA states that taxpayers falling within a Phase 2 wave are notified at least six months before their applicable integration date.

Important:

Meeting a revenue criterion does not replace the need to review the taxpayer’s actual ZATCA notification and applicable integration date.

Businesses should therefore monitor official ZATCA communications and assess their invoicing systems before the mandatory integration deadline.

Tax Invoice vs Simplified Tax Invoice in Saudi Arabia

One of the most important parts of e-invoicing KSA compliance is understanding which type of invoice is being generated.

Area	Tax Invoice	Simplified Tax Invoice
Common use	Usually B2B	Usually B2C
Typical customer	Business customer	Individual consumer
Electronic generation	Required	Required
Phase 2 process	Clearance	Reporting
ZATCA timing	Must obtain clearance before being shared with the customer under Phase 2	Must generally be reported to ZATCA within 24 hours of issuance
QR Code	Subject to applicable Phase 2 requirements	Required according to applicable ZATCA requirements
Credit/debit notes	Applicable electronic notes follow corresponding requirements	Applicable electronic notes follow corresponding requirements

ZATCA describes a tax invoice as an invoice usually issued from one business to another, while a simplified tax invoice is usually issued from a business to a consumer.

What Is ZATCA Clearance for B2B Tax Invoices?

For taxpayers subject to Phase 2, standard tax invoices and their associated electronic notes follow the clearance model.

Under this model, the electronic invoice is transmitted to ZATCA for verification.

Once the invoice meets the required controls, ZATCA processes the invoice through the applicable clearance mechanism. The cleared invoice can then be shared with the customer.

This means businesses subject to the Integration Phase need an invoicing system capable of communicating with ZATCA correctly before completing the B2B invoice process.

What Is Reporting for Simplified Tax Invoices?

Simplified tax invoices follow a different process.

For Phase 2 taxpayers, simplified invoices are generated by the compliant electronic invoicing solution and subsequently submitted to ZATCA through the FATOORA platform.

ZATCA requires applicable simplified tax invoices and associated notes to be transmitted for reporting within 24 hours of issuance.

This requirement can be particularly important for:

• Retail businesses
• Restaurants
• E-commerce businesses
• Hospitality companies
• Consumer service providers
• Businesses operating multiple POS terminals
• Companies processing high daily transaction volumes

What Are the Main ZATCA E-Invoicing Technical Requirements?

Phase 2 goes considerably beyond simply creating a digital invoice.

A compliant solution may need to support a combination of technical and security requirements.

Structured XML

Phase 2 invoices must follow the applicable structured electronic invoice requirements published by ZATCA.

ZATCA publishes an Electronic Invoice Data Dictionary and XML Implementation Standard to define the required invoice structure and data elements.

XML or PDF/A-3 With Embedded XML

Depending on the applicable process and document use, compliant invoices are generated using the prescribed structured electronic format, including XML or PDF/A-3 containing embedded XML as provided in ZATCA’s requirements.

QR Code

QR codes form part of the applicable e-invoicing requirements.

ZATCA’s technical specification defines QR-code data using TLV encoding and identifies required fields and additional Phase 2 elements.

Cryptographic Stamp

Cryptographic mechanisms are used as part of the Integration Phase framework to help verify invoice authenticity and integrity.

Invoice Hash

A hash is used within invoice sequencing to help prevent invoices from being deleted, substituted, or altered without detection.

Tamper-Resistant Invoice Counter

ZATCA’s technical requirements include a tamper-resistant invoice counter that cannot simply be reset or reformatted.

System Connectivity

The e-invoicing solution needs appropriate internet connectivity and API integration capabilities to communicate with ZATCA.

Controlled User Access

Systems should prevent uncontrolled access and prohibited modifications to invoices, system records, or invoice sequences.

These controls are important because ZATCA e-invoicing compliance is not only an accounting requirement. It also affects ERP configuration, software architecture, data structure, security, and internal processes.

Common Saudi E-Invoicing Compliance Risks

Businesses often focus on generating an invoice that appears correct on screen.

However, Phase 2 compliance depends on much more than the visible invoice.

Common risks may include:

Risk	Possible Compliance Issue
Incorrect invoice fields	Invoice may fail ZATCA validation
Incorrect VAT information	Can create VAT and invoicing discrepancies
Missing buyer information	May affect applicable B2B requirements
Incorrect XML structure	File may be rejected or generate validation errors
Incorrect QR implementation	Invoice may not satisfy applicable technical requirements
ERP not connected to FATOORA	Phase 2 integration cannot operate correctly
Delayed B2C reporting	Simplified invoices may miss the required reporting timeframe
Invoice issued before required clearance	Can create Phase 2 compliance issues for applicable tax invoices
Editable/deletable invoice records	May conflict with system-control requirements
Multiple uncontrolled sequences	May conflict with ZATCA technical controls
Poor system onboarding	Integration or device authentication may fail
Weak internal processes	Finance and IT teams may handle invoices inconsistently

How Eighty20 Helps With KSA Electronic Invoicing

Our role is to help businesses connect the regulatory, accounting, and operational parts of Saudi e-invoicing.

Instead of looking only at the software, we review how invoices are created, classified, taxed, transmitted, recorded, and maintained.

ZATCA E-Invoicing Readiness Assessment

We begin by reviewing your current invoicing environment.

This can include:

• Existing ERP or accounting software
• Invoice types
• VAT registration information
• Customer categories
• B2B and B2C transaction flows
• Current invoice templates
• Credit and debit note processes
• Branches and POS terminals
• Current integration status
• ZATCA notification status

The goal is to identify gaps between your current process and applicable Saudi Arabia e-invoicing requirements.

Phase 1 Compliance Review

We assess whether the current invoicing process includes the information and controls required under the Generation Phase.

This may involve reviewing:

• Tax invoice structure
• Simplified tax invoice structure
• QR-code requirements
• Invoice numbering
• VAT information
• Credit and debit notes
• Electronic storage
• Current system controls

Phase 2 Gap Assessment

If your business has entered, or is preparing to enter, the Integration Phase, we review the additional requirements applicable to Phase 2.

Our review can cover:

• FATOORA integration readiness
• Invoice XML requirements
• Mandatory data fields
• Clearance workflow
• Reporting workflow
• System security controls
• Invoice hash and sequencing considerations
• QR-code requirements
• Integration dependencies

ERP and Accounting System Readiness Support

Many businesses already have an ERP but do not know whether its configuration matches their Saudi e-invoicing obligations.

We can work with your accounting, finance, and technical teams to identify what the system needs from a tax and compliance perspective.

Depending on the business environment, this can involve systems such as:

• SAP
• Oracle
• Microsoft Dynamics
• Odoo
• Zoho
• ERP platforms
• POS systems
• Custom-built accounting and billing solutions

We focus on the compliance requirements and help coordinate them with the relevant implementation team or software provider.

Invoice Template and Data Review

A technically connected system can still generate incorrect invoices when master data or tax configuration is wrong.

We review areas such as:

• Seller information
• Buyer information
• VAT registration numbers
• Invoice type
• Invoice date and timestamp
• Taxable amount
• VAT amount
• Invoice total
• Item description
• Currency information
• Applicable tax treatment
• Credit and debit notes
• Other required invoice data

FATOORA Integration Coordination

For Phase 2 taxpayers, integration with the FATOORA platform becomes a central compliance requirement.

We help businesses understand the integration workflow and coordinate the compliance side with relevant internal teams and solution providers.

ZATCA’s guidance sets out the onboarding of e-invoicing solution units/devices and integration of compliant solutions with the FATOORA platform.

Clearance and Reporting Process Review

We help finance teams distinguish between the two critical Phase 2 workflows:

Tax invoices → Clearance

Simplified tax invoices → Reporting

This distinction is especially important for businesses that process both B2B and B2C transactions.

Testing and Compliance Checks

Before full implementation, businesses should check whether invoices are being generated correctly.

ZATCA provides technical resources including its sandbox, SDK, and validation tools to support solution testing.

Testing can help identify issues before they affect live invoices.

Ongoing E-Invoicing Compliance Support

E-invoicing should not be treated as a one-time IT implementation.

Businesses may subsequently change:

• ERP systems
• Branches
• POS units
• Products
• Tax configurations
• Entity information
• Billing workflows
• Customer data
• Internal controls

Our ongoing ZATCA e-invoicing compliance support helps businesses review the compliance implications of these changes.

Our KSA E-Invoicing Compliance Process

Step 1: Understand Your Business

We review your company structure, VAT position, transaction types, and invoice volumes.

Step 2: Review Current Invoicing

We assess current tax invoices, simplified invoices, credit notes, debit notes, and invoicing workflows.

Step 3: Identify Your Applicable Phase

We establish whether you are operating under Phase 1 requirements only or have received notification requiring Phase 2 integration.

Step 4: Perform Compliance Gap Analysis

We compare your existing process and system against applicable ZATCA requirements.

Step 5: Build an Action Plan

We identify required accounting, tax, process, and system changes.

Step 6: Coordinate Implementation

We work with relevant finance, accounting, IT, ERP and software teams to support implementation from a tax-compliance perspective.

Step 7: Review Invoice Output

Generated invoices and associated processes are reviewed against applicable requirements.

Step 8: Support Ongoing Compliance

We help your team respond to future changes, new ZATCA requirements, or invoicing-process updates.

Industries We Support With Saudi E-Invoicing

Our e-invoicing KSA support can be relevant across a wide range of industries.

Industry	Typical E-Invoicing Considerations
Retail	High B2C invoice volumes, POS systems and 24-hour reporting
E-commerce	Online sales, payment platforms and simplified invoice reporting
Construction	B2B invoices, contracts, project billing and progress invoices
Professional Services	B2B tax invoices and client billing
Healthcare	High transaction volumes and multiple billing systems
Hospitality	POS integration and consumer invoices
Manufacturing	ERP integration, inventory and B2B invoicing
Wholesale & Trading	Large B2B transaction volumes and customer VAT data
Technology	Automated billing and subscription invoices
Logistics	High-volume customer billing and branch operations
Real Estate	Contract-driven invoicing and VAT treatment
Multi-branch Businesses	Multiple EGS units, POS systems and central accounting

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