ZATCA E-Invoicing Phase 1 vs Phase 2: What Saudi Businesses Need to Know in 2026

If you sell to customers in Saudi Arabia, you've probably heard the term "ZATCA e-invoicing" thrown around — sometimes with a looming deadline attached. The Zakat, Tax and Customs Authority (ZATCA) rolled its e-invoicing mandate out in two distinct stages, and understanding the difference between them is the first step to figuring out what actually applies to your business right now.

Phase 1: Generation

Phase 1 has been in effect since December 4, 2021, and applies to every VAT-registered business in Saudi Arabia. It requires invoices to be generated electronically through a compliant system rather than handwritten or produced in a plain word processor. In practice, this means:

• Invoices must be issued as structured electronic documents — a proper e-invoicing system, not a scanned PDF of a paper invoice.
• Tax invoices must include an embedded QR code.
• Invoices must be issued in Arabic (a second language can be added alongside it).
• Electronic invoices and their related notes must be kept on record for at least 6 years within Saudi Arabia.

Phase 1 does not require you to connect to ZATCA in real time — it's about generating invoices the right way, in the right format, from day one.

Phase 2: Integration

Phase 2 is where things get more involved. Since January 1, 2023, ZATCA has been rolling businesses onto Phase 2 in waves, based on annual VAT-registered revenue — largest businesses first, smaller ones later. Under Phase 2, your e-invoicing system must integrate directly with ZATCA's platform, known as Fatoora. The requirements differ depending on the type of invoice:

• Standard Tax Invoices (typically B2B and B2G) must be sent to ZATCA for real-time clearance — ZATCA cryptographically stamps the invoice and returns it before it's shared with the buyer.
• Simplified Tax Invoices (typically B2C, like a retail receipt) can be issued to the customer immediately, but must be reported to ZATCA within 24 hours.

Phase 2 invoices also need a few technical additions on top of Phase 1's requirements: a cryptographic stamp and Compliance CSID (Cryptographic Stamp Identifier), a UUID (a unique identifier for each invoice), and sequential invoice numbering that can't have gaps.

The 2026 integration waves

ZATCA has continued to bring smaller businesses into Phase 2 throughout 2025 and 2026, based on revenue thresholds. The waves relevant for 2026 (subject to ZATCA's official announcements, which are the authoritative source):

• Wave 23 — businesses with VAT-registered revenue above SAR 750,000, deadline March 31, 2026.
• Wave 24 — businesses with VAT-registered revenue above SAR 375,000, deadline June 30, 2026.
• Wave 25 — businesses with VAT-registered revenue above SAR 187,500, deadline February 1, 2027.

ZATCA also ran a penalty-waiver (amnesty) initiative for businesses catching up on compliance, which is set to expire permanently on June 30, 2026. If your business falls into one of these thresholds, it's worth checking ZATCA's official Fatoora portal for your exact notification date rather than relying on the general wave schedule alone — ZATCA notifies each business directly ahead of its deadline.

What this means if you're a smaller business

Even if you haven't been notified for Phase 2 integration yet, Phase 1 already applies to you — every VAT-registered business needs a compliant electronic invoicing system today, complete with a QR code and proper record-keeping. Getting that foundation right now, with a tool built around ZATCA's format, means Phase 2 integration is a smaller step later rather than a scramble against a deadline.