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Saudi Arabia: ZATCA Extends Phase 2 E-Invoicing to Smaller Businesses Under Wave 24

Country Update — Saudi Arabia  |  29 June 2026  |  Topic: E-Invoicing (Continuous Transaction Controls)

Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) has confirmed the criteria for Wave 24 of the “Integration Phase” (Phase 2) of its mandatory e-invoicing (Fatoora) program. Targeted taxpayers must integrate their e-invoicing systems with ZATCA’s Fatoora platform no later than 30 June 2026. For the first time, the qualifying revenue threshold falls to SAR 375,000, drawing thousands of smaller businesses into the integrated regime.

Background

Saudi Arabia introduced e-invoicing in two phases. Phase 1 (the Generation Phase) took effect on 4 December 2021, requiring all VAT-registered taxpayers to stop issuing handwritten or simple software-generated invoices and to produce and store structured electronic invoices containing mandatory fields, including a QR code. Phase 2 (the Integration Phase) builds on this by requiring taxpayers to connect their e-invoicing solutions directly to ZATCA’s Fatoora platform for clearance and reporting. ZATCA has rolled out Phase 2 gradually through successive “waves,” each defined by a revenue threshold, and notifies each wave at least six months before its integration date.

The Legislative Change

On 26 September 2025, ZATCA published the selection criteria for Wave 24. The wave captures all taxpayers whose revenues subject to VAT exceeded SAR 375,000 in 2022, 2023, or 2024. ZATCA will notify each affected taxpayer directly and require integration with the Fatoora platform no later than 30 June 2026. This is the lowest threshold announced to date, marking a decisive step toward bringing the full VAT-registered population into the integrated, clearance-based model.

Scope

Phase 2 imposes materially greater obligations than Phase 1. In addition to generating compliant invoices, in-scope taxpayers must:

  • Integrate their e-invoicing solution with ZATCA’s Fatoora platform via API.
  • Issue invoices in the prescribed structured format (XML, or PDF/A-3 with embedded XML).
  • Include additional mandatory data fields beyond those required in Phase 1.
  • Apply ZATCA’s clearance model for standard (B2B/B2G) tax invoices and the reporting model for simplified (B2C) invoices, including cryptographic stamping and UUIDs.

Timeline

Wave 24 taxpayers (annual VAT-relevant revenue above SAR 375,000 in any of 2022, 2023, or 2024) must complete integration with Fatoora by 30 June 2026. ZATCA continues to confirm later waves on a rolling basis, notifying each at least six months ahead of its integration deadline.

Businesses Affected

Wave 24 reaches well beyond large enterprises. The SAR 375,000 threshold corresponds to the standard mandatory VAT-registration level in Saudi Arabia, so the practical effect is to capture a large segment of small and medium-sized businesses that were previously only subject to the Generation Phase. Multinationals with Saudi subsidiaries, local SMEs, and foreign businesses with a taxable presence should all confirm whether they fall within the wave.

Required Actions

  • Confirm whether your entity meets the SAR 375,000 threshold and watch for direct notification from ZATCA.
  • Assess your ERP or billing system’s readiness for API integration, structured formats, and cryptographic requirements.
  • Engage an accredited solution provider or implementation partner where in-house capability is limited.
  • Run end-to-end testing against the Fatoora sandbox well before the 30 June 2026 deadline.
  • Validate master data and tax determination to avoid clearance rejections.

Practical Implications

Integration with a clearance platform changes invoicing from a back-office process into a real-time, transaction-level control. Errors in data quality, tax determination, or system configuration can block invoice issuance and disrupt order-to-cash. Smaller businesses entering scope for the first time often underestimate the lead time required for ERP changes, testing, and accreditation, particularly where invoicing is highly customized.

Expected Next Steps

ZATCA is expected to continue announcing further waves at progressively lower thresholds, ultimately covering the entire VAT-registered population. Businesses not yet in scope should treat Wave 24 as a clear signal to begin preparing now rather than waiting for individual notification.

How Can KGT Support You?

KGT specializes in SAP-integrated e-invoicing solutions and add-ons for continuous transaction control regimes. Where SAP Document and Reporting Compliance (SAP DRC) does not provide native coverage for a jurisdiction, KGT develops certified SAP add-ons and supports integration, configuration, testing, and training. If you need to meet ZATCA’s Phase 2 requirements in an SAP environment, we are happy to arrange a demonstration and answer your questions.

Official sources

  • ZATCA – Wave 24 criteria (official news release): View source
  • ZATCA – E-Invoicing roll-out phases: View source

This content is provided solely to enhance knowledge of tax matters. It does not constitute tax advice for any taxpayer because it does not take into account any specific taxpayer’s facts and circumstances.

Country update for Saudi Arabia
28 June 2026
Stay informed about the latest indirect tax developments in Saudi Arabia, including regulatory changes, compliance requirements, and indirect tax guidance affecting businesses operating locally and cross-border. This page provides a structured overview of country-specific updates, such as new legislation, reporting obligations, digital tax initiatives, and implementation timelines.
These insights help tax, finance, and compliance professionals anticipate regulatory changes, adjust processes and systems, and maintain compliant operations in Saudi Arabia.