We get a lot of questions about ZATCA e-invoicing from shop owners in Riyadh, mostly from people who did everything right for Phase 1 and then heard there's a Phase 2. This is the plain version of what we tell them.
This is a general explanation, not tax advice. ZATCA's own guidance and your accountant have the final word.
Phase 1, quickly
Since December 2021, VAT-registered businesses in Saudi Arabia have had to issue invoices from an electronic system: no handwritten invoices, no editing an invoice in Word. Simplified invoices (the ones you give everyday customers) need a QR code on them. Most shops got this done with a POS or invoicing app.
What Phase 2 adds
Phase 2 is called the integration phase, and that's the real change. Your invoicing system doesn't just create invoices any more, it has to talk to ZATCA's platform (called FATOORA) directly.
In practice that means:
- B2C sales (simplified invoices): you hand the customer their receipt as normal, and your system reports the invoice to ZATCA within 24 hours.
- B2B sales (standard tax invoices): the invoice goes to ZATCA first to be cleared, and only then is it shared with your buyer.
- Invoices are structured data, in a specific XML format, with a cryptographic stamp that proves which device issued them and that nobody changed them afterwards.
- Each device or system is registered (ZATCA calls this onboarding) using a one-time code from the FATOORA portal.
If your current POS can't do those things, it won't be enough for Phase 2, even if it was fine for Phase 1.
When does it apply to you?
ZATCA has been bringing businesses into Phase 2 in waves, starting with the largest and working down by revenue. When it's your turn, ZATCA notifies you, normally at least six months ahead. If you've had that notice, the date is on it. If you're not sure, check your account on the ZATCA portal or ask your accountant.
Six months sounds like a lot. It isn't, if you need to change systems, train staff and move your products and customers across.
Getting ready
- Ask your current software provider one direct question: "Is your system integrated with FATOORA for Phase 2, and will you onboard my devices?" A vague answer is a no.
- Clean up your customer records. For B2B invoices you need your buyers' VAT numbers and addresses right. Wrong details mean rejected invoices.
- Check your internet at the till. Simplified invoices can be reported later in the day, but your system has to sync. Ask what happens when the connection drops.
- Run it for a few weeks before your date, so staff aren't learning a new checkout on the day it becomes compulsory.
Where we come in
We built Hisaabii for exactly this: ZATCA-compliant invoicing for Phase 1 and Phase 2, in Arabic and English, with the rest of the business (clients, stock, expenses) around it. For neighbourhood groceries there's Hisaabii Baqala, a simple POS with customer credit (the "khata" most baqalas still keep on paper) and ZATCA invoices built in.
You can try a live demo of either from the product page, no sales call needed.