E-invoicing in UAE
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Last updated at
June 15, 2026
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Book NowSaudi Arabia's ZATCA has announced Wave 24 of Phase 2 e-invoicing, covering businesses with VAT-taxable revenues above SAR 375,000 in 2022, 2023, or 2024. These businesses must integrate their e-invoicing systems with the Fatoora platform by 30 June 2026. With the compliance deadline and penalty waiver ending on the same date, businesses should act now to avoid penalties and complete their integration on time. This article explains who falls under Wave 24, what Phase 2 requires, and the steps businesses must take before the deadline.
Saudi Arabia's e-invoicing programme, known as Fatoorah, was implemented by ZATCA in two phases, each with distinct technical requirements.
Phase 1 (Generation Phase) came into effect on 4 December 2021. It applied to all taxpayers in Saudi Arabia, excluding non-resident taxpayers, and any other parties issuing tax invoices on behalf of suppliers subject to VAT. It required them to stop issuing handwritten or text-editor-generated invoices and move to a compliant electronic invoicing solution. Invoices had to include a QR code and all mandatory data fields, and had to be stored electronically by the taxpayer.
Phase 2 (Integration Phase), which began on 1 January 2023, is being rolled out in waves by taxpayer group and introduces significantly more requirements than Phase 1. Under Phase 2, businesses must integrate their invoicing solutions directly with ZATCA's Fatoora platform through a secure API connection. Invoices are transmitted to ZATCA in real time and must pass ZATCA's validation before they carry any legal standing.
On 26 September 2025, ZATCA announced the criteria for Wave 24 of Phase 2 e-invoicing. The wave covers all taxpayers whose revenues subject to VAT exceeded SAR 375,000 during 2022, 2023, or 2024. ZATCA directly notifies all targeted taxpayers at least six months before their integration date.
| Wave | Revenue Threshold | Integration Deadline |
| Wave 22 | Above SAR 1 million (2022–2024) | 31 December 2025 |
| Wave 23 | Above SAR 750,000 (2022–2024) | 31 March 2026 |
| Wave 24 | Above SAR 375,000 (2022, 2023, or 2024) | 30 June 2026 |
What Phase 2 Requires Technically
Phase 2 introduces a materially different compliance standard compared to Phase 1. Every Wave 24 business must meet the following requirements before the 30 June 2026 deadline.
All e-invoices must be generated in UBL 2.1 XML format, or as PDF/A-3 with an embedded XML file. Standard unstructured PDFs, scanned invoices, and invoices generated through text-editing software do not meet Phase 2 requirements under any circumstance.
ZATCA distinguishes between two types of invoices under Phase 2, each with its own submission process:
Standard Tax Invoice (B2B and B2G): This invoice must be submitted to ZATCA for real-time clearance before it is shared with the buyer. The invoice is only legally valid after ZATCA clears it and returns it with a cryptographic stamp. An invoice that has not been cleared by ZATCA cannot be issued to a buyer.
Simplified Tax Invoice (B2C): This invoice is issued to the buyer at the time of the transaction. It must be reported to ZATCA within 24 hours of issuance, as delayed or missing reports can result in financial penalties.
Every compliant Phase 2 e-invoice must contain all five of the following fields, A missing or incorrect field results in rejection by the Fatoora platform at the point of submission:
A UUID (Unique Universal Identifier) that is uniquely assigned to each individual invoice
A cryptographic stamp applied to the invoice using a CSID (Cryptographic Stamp Identifier)
A digital signature using an X.509 certificate issued through ZATCA's onboarding process
A TLV-encoded QR code that contains all 9 mandatory tags as specified by ZATCA
A SHA-256 invoice hash chain that links each invoice to the one before it
The E-Invoice Generation Solution (EGS) used by the business must connect to ZATCA's Fatoora platform through a certified API. This connection handles both clearance and reporting automatically without any manual intervention required. There is no portal-based manual submission option that substitutes for API integration under Phase 2.
ZATCA operates three separate environments for e-invoicing integration, each serving a distinct purpose in the taxpayer journey:
Developer Sandbox: Used for early-stage development and XML schema validation, this environment issues certificates that are intended only for developers building or configuring the EGS solution and cannot be used in production.
Simulation Portal (FSP): An exact replica of the production environment, This is where businesses complete full dry-run testing of their onboarding, clearance, and reporting workflows before going live. ZATCA recommends completing testing here before submitting to the production environment.
Production Portal (Fatoora): The live environment where actual invoices are submitted, Every invoice transmitted here is a legal tax document and requires ERAD credentials with multi-factor authentication to access.
Before any invoice can be submitted to the Fatoora production environment, the business's EGS must complete the following onboarding process:
Step 1: Access the Fatoora Portal: Log in to the ZATCA Taxpayer Portal using Single Sign-On (SSO) to authenticate the taxpayer before starting the device registration process.
Step 2: Generate a One-Time Password (OTP): Generate an OTP through the Fatoora Portal to begin the CSID issuance process. This step links the EGS unit to the taxpayer's registered account with ZATCA.
Step 3: Submit a Certificate Signing Request (CSR): The EGS submits a CSR to ZATCA to receive a Compliance CSID. This compliance certificate is required before ZATCA's technical checks can begin.
Step 4: Complete Compliance Checks: The EGS runs through ZATCA's compliance validation, which confirms the solution meets all Phase 2 technical requirements before production access is granted.
Step 5: Receive the Production CSID and Go Live: Once compliance checks pass, ZATCA issues a production CSID, which carries a defined validity period and must be renewed before expiry. The EGS is now authorised to submit invoices to the live Fatoora platform for clearance and reporting.
ZATCA has been running a penalty cancellation initiative to support businesses transitioning into Phase 2. This initiative expires permanently on 30 June 2026, the same date as the Wave 24 integration deadline. From 1 July 2026, ZATCA's systems move into full enforcement mode with no exceptions.
ZATCA has officially published the following penalty structure for e-invoicing violations under the Fatoorah programme:
Non-issuance or non-archiving of e-invoices carries a penalty starting from SAR 5,000
Deletion or amendment of e-invoices after issuance carries a penalty starting from SAR 10,000
Not including the QR code in simplified tax invoices or failing to notify ZATCA of a malfunction begins with a warning
All penalties are applied according to the type of violation and the number of times it is repeated within a 12-month period, with fines escalating progressively for each repeat offence. There is no indication from ZATCA that the penalty waiver will be extended beyond 30 June 2026.
The following are the steps every Wave 24 business must work through before the deadline:
Confirm your scope: Check the e-invoicing section of your ZATCA portal to confirm whether your business has received formal notification. If your VAT-subject revenues exceeded SAR 375,000 in any of the years 2022, 2023, or 2024, you are in scope for Wave 24.
Assess your current invoicing system: Your EGS must generate UBL 2.1 XML invoices, apply cryptographic stamps, produce TLV-encoded QR codes, and connect to ZATCA's Fatoora API. A system that meets Phase 1 requirements alone does not meet Phase 2 requirements.
Select a compliant solution or solution provider: ZATCA provides a list of qualified solution providers on its website to help taxpayers choose a solution. However, businesses can use any solution that meets ZATCA's technical requirements, and the taxpayer remains responsible for compliance regardless of the provider selected.
Complete onboarding and simulation testing: Run a complete end-to-end test in the Fatoora Simulation Portal before going live in production. This must cover EGS onboarding, submission of test standard tax invoices for clearance, and reporting of test simplified invoices. Errors caught in simulation cost far less than errors encountered in production.
Set up invoice archiving: All Phase 2 invoices and their associated ZATCA clearance or reporting responses must be stored securely and remain accessible for audit. The retention requirements under Saudi VAT law apply to all archived e-invoices.
Train the teams responsible for invoicing: Finance and operations staff must understand the clearance workflow for standard invoices, the 24-hour reporting obligation for simplified invoices, and the process for handling ZATCA rejection codes when they occur.
Wave 24 is the largest ZATCA Phase 2 e-invoicing wave in Saudi Arabia so far, with the eligibility threshold reduced to SAR 375,000. Businesses must complete their compliance requirements by 30 June 2026, when the penalty waiver ends and full enforcement begins. To get started with ZATCA Phase 2 e-invoicing compliance, contact Flick Network at sales@flick.network
Who falls under ZATCA Wave 24?
Wave 24 covers all taxpayers whose revenues subject to VAT exceeded SAR 375,000 during 2022, 2023, or 2024. ZATCA notifies each targeted taxpayer directly, at least six months before their integration deadline.
What is the difference between clearance and reporting under Phase 2?
Under Phase 2, clearance is used for standard tax invoices (B2B and B2G), where the invoice must be approved by ZATCA before it is sent to the buyer. Reporting is used for simplified tax invoices (B2C), where the invoice is first issued to the buyer and then reported to ZATCA within 24 hours.
Can a Phase 1 system be used for Phase 2 compliance?
Yes, a Phase 1 system can be used for Phase 2 compliance, but only after it has been upgraded to meet all Phase 2 requirements. If the system has not been upgraded, it does not comply with Phase 2 rules.
What are the penalties for not integrating by 30 June 2026?
The ZATCA penalty waiver expires on 30 June 2026, and full enforcement begins from 1 July 2026. ZATCA has officially published that non-issuance of e-invoices starts from SAR 5,000, and deletion or amendment after issuance starts from SAR 10,000, with all penalties applied based on violation type and repetitions.
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