Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) requires VAT-registered businesses to issue electronic invoices. The programme runs in two phases, and the difference matters when you choose an ERP. This article is a general guide, not tax advice — always check ZATCA’s official documentation and your tax adviser for the rules and dates that apply to your business.
Phase 1: the generation phase
Phase 1 began on 4 December 2021. It requires invoices to be generated by an e-invoicing solution rather than written by hand or edited freely afterwards. In practice that means:
- Invoices are produced electronically with the required fields — seller and buyer details, VAT registration number, date, itemised lines, VAT and totals.
- Simplified (B2C) invoices carry a QR code encoded to a specified format (a Base64 TLV payload containing the seller name, VAT number, timestamp, invoice total and VAT total).
- Invoice numbers are sequential, and an issued invoice cannot be deleted or silently changed.
- Corrections are made with credit notes and debit notes that reference the original invoice.
Phase 1 does not require you to send each invoice to ZATCA.
Phase 2: the integration phase
Phase 2 began on 1 January 2023 and applies to businesses in waves, in order of revenue threshold. ZATCA notifies selected taxpayers in advance of their wave. Phase 2 adds integration with ZATCA’s Fatoora platform:
- Standard (B2B) invoices are submitted for clearance before they are issued to the buyer.
- Simplified (B2C) invoices are reported to ZATCA within a defined window after issue.
- Invoices are produced in a prescribed XML format, with a cryptographic stamp.
- Your invoicing solution must be onboarded to ZATCA and hold the credentials to do so.
What this means for choosing an ERP
- Ask which phase the ERP supports today — and get it in writing. Some systems generate Phase 1 invoices; Phase 2 needs a certified integration.
- Check which wave applies to you. If you have been notified, your ERP’s Phase 2 readiness is a requirement, not a nice-to-have.
- Look at numbering and corrections. Gapless numbering and append-only invoices with credit and debit notes are the foundation of both phases.
- Ask how continuity works if you already issue invoices from another system — the sequence must carry on without gaps or duplicates.
Where Big Beam stands
Big Beam’s invoicing generates standard and simplified invoices to the Phase 1 requirements, with a QR code, gapless numbering and credit and debit notes. Phase 2 integration is on our roadmap, and we implement it for clients who need it, once their wave and onboarding are known. See the ZATCA e-invoicing page for the detail, or ask us for the current status before you decide.