Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA) requires VAT-registered businesses to issue electronic invoices. The programme, known as Fatoora, has been rolled out in two phases. This guide summarises what businesses need to know when integrating ERP or billing systems. It is general information, not tax advice; always check ZATCA's current rules and your own wave dates.
The two phases
- Phase 1 (generation) took effect in December 2021. Businesses must generate and store invoices electronically through compliant solutions, with required fields and a QR code on simplified invoices.
- Phase 2 (integration) began in January 2023 and is being applied to taxpayers in waves, based on criteria such as revenue. Selected taxpayers must integrate their e-invoicing systems with ZATCA's Fatoora platform.
ZATCA notifies taxpayers of their wave in advance, so check your notification and the authority's published guidance.
Invoice types
| Type | Typical use | Phase 2 flow |
|---|---|---|
| Standard tax invoice | Business to business | Cleared by ZATCA before sharing with the buyer |
| Simplified tax invoice | Business to consumer | Reported to ZATCA after issue, within a set period |
Credit and debit notes follow the same logic as the invoices they relate to.
Key technical requirements
Compliant solutions generally need to:
- Produce invoices in the required structured XML format (with PDF/A-3 where a human-readable copy is shared).
- Include mandatory fields such as seller and buyer VAT numbers, invoice counters and timestamps.
- Generate a QR code with the required data.
- Apply a cryptographic stamp using certificates obtained through ZATCA's onboarding process.
- Chain invoices using hashes and unique identifiers so they cannot be altered.
- Connect to ZATCA's APIs for clearance or reporting, and handle errors and retries.
- Prevent deletion or tampering of issued invoices.
Integration options
- ERP with built-in compliance: many ERP vendors and partners provide ZATCA-ready modules. Confirm they support Phase 2 and are maintained.
- Middleware: a specialised e-invoicing service sits between your system and ZATCA, receiving invoice data and handling formatting, stamping and submission.
- Custom integration: for bespoke billing systems, developers implement the requirements directly against ZATCA's specifications and sandbox.
Steps to prepare
- Confirm your wave and deadline.
- List every system that issues invoices: ERP, POS, e-commerce, apps and manual processes.
- Choose an integration approach for each.
- Clean master data, especially customer VAT numbers and addresses for B2B invoices.
- Complete onboarding and test in ZATCA's sandbox environment.
- Train staff on error handling and corrections.
Common pitfalls
- Forgetting secondary invoicing channels such as a website or a branch POS.
- Missing or invalid buyer VAT numbers causing B2B clearance rejections.
- No process for handling submissions that fail during an outage.
Our ERP solutions team scopes and implements ZATCA integration within ERP and custom billing projects.
Frequently asked questions
Does ZATCA e-invoicing apply to all businesses?
It applies to VAT-registered persons in Saudi Arabia, with Phase 2 integration applied in waves. Check ZATCA's official guidance for your obligations.
Can a custom-built billing system be made compliant?
Yes, by implementing ZATCA's technical specifications directly or by connecting it to a compliant e-invoicing middleware.