Saudi Arabia e-Invoicing Guide

Saudi Arabia operates one of the most advanced e-invoicing systems in the world. Through ZATCA's FATOORAH platform, the Kingdom has built a clearance model where B2B and B2G invoices must be approved by the tax authority before they can be issued to the buyer. This gives ZATCA real-time control over the entire invoicing chain.

The mandate covers B2B, B2G, and B2C transactions — making it one of the broadest scopes globally. Phase 1, which required all VAT-registered businesses to generate compliant e-invoices, has been in effect since December 2021. Phase 2 adds integration with FATOORAH and is being rolled out in revenue-based waves.

Phase 2 integration is being deployed in over 24 waves, starting with the largest taxpayers (revenue above SAR 3 billion in January 2023) and progressively lowering the threshold. By mid-2026, businesses with revenue above SAR 375,000 will be required to integrate, with further waves expected to bring in even smaller entities.

Every VAT-registered taxpayer in Saudi Arabia must generate e-invoices that conform to ZATCA's specifications, regardless of revenue. This is the Phase 1 requirement and has been in effect since December 2021. Phase 2 adds the obligation to integrate directly with the FATOORAH platform via API.

Phase 2 integration is triggered by revenue threshold. Businesses receive notification from ZATCA when their wave approaches. B2C transactions follow a slightly different path: they require near real-time reporting with cryptographic stamps and QR codes, but not the full pre-clearance that B2B invoices undergo.

For B2B and B2G invoices, Saudi Arabia uses a clearance model. The seller's system submits the invoice to FATOORAH via API. ZATCA validates the invoice, applies a cryptographic stamp, and returns it with approval. Only then can the invoice be sent to the buyer. This pre-clearance step ensures every tax invoice has been verified before it enters circulation.

B2C invoices take a different path: they are generated locally with a cryptographic stamp and QR code, then reported to FATOORAH in near real-time. The invoice format is UBL 2.1 with ZATCA-specific extensions, and all invoices must include a unique identifier assigned by the system.

ZATCA enforces strict penalties for both Phase 1 and Phase 2 violations. Non-compliance can block a business from issuing valid invoices entirely, since the clearance model means an unapproved invoice has no legal standing. Penalties cover everything from system implementation failures to incorrect invoice data.