If your business issues VAT invoices from its own software, such as an ERP, a point-of-sale system, an online store or a custom booking app, ZATCA’s e-invoicing rules decide how that software must create and share invoices. Phase 2, the Integration Phase, connects your invoicing system directly to ZATCA’s Fatoora platform. This guide explains what that means in practice for business owners and product teams in Saudi Arabia.
Phase 1 and Phase 2 in one minute
- Phase 1 (Generation) started on 4 December 2021. Invoices must be issued through a compliant electronic solution and include additional fields, depending on the type of transaction.
- Phase 2 (Integration) started on 1 January 2023 and is being rolled out in waves. Your e-invoicing solution must be integrated with ZATCA’s systems, and invoices must be generated in the required format.
Who has to integrate, and when?
ZATCA selects taxpayers for Phase 2 in waves, based on their revenue subject to VAT. For example, Wave 24 covers taxpayers whose VAT-subject revenues exceeded SAR 375,000 in 2022, 2023 or 2024, with an integration deadline of 30 June 2026 (ZATCA announcement). ZATCA notifies each wave at least six months before its integration date, so check your ZATCA notifications and portal rather than guessing.
What changes technically
A Phase 2 invoice is no longer just a PDF. Your system has to produce and exchange a structured, signed record. In practice this means:
- Structured XML that follows ZATCA’s e-invoice specification (based on UBL 2.1), alongside the human-readable invoice.
- A cryptographic stamp and a QR code on every invoice.
- Identifiers that chain invoices together, such as a unique ID, an invoice counter and the hash of the previous invoice, so the sequence is tamper-evident.
- Onboarding each invoicing unit (each device or system that issues invoices) with ZATCA to obtain its cryptographic stamp identifier (CSID) through the Fatoora portal.
- Clearance for standard invoices: B2B and B2G tax invoices are sent to ZATCA and validated before you share them with the buyer.
- Reporting for simplified invoices: B2C simplified invoices are shared with the customer immediately and reported to ZATCA within 24 hours.
Build, buy or connect?
| Option | Best when | Watch out for |
|---|---|---|
| Use your ERP or POS vendor’s Phase 2 module | You already run a mainstream ERP or POS that supports Fatoora integration | Licence costs, and whether it covers every place you issue invoices (app, website, branches) |
| Connect through an e-invoicing provider’s API | You have custom software and want the fastest route | Per-invoice fees, data flows through a third party, and dependency on their uptime |
| Integrate directly in your custom software | Invoicing is core to your product, or you issue high volumes | You own onboarding, key security, retries and future ZATCA specification updates |
Checklist for a custom app, ERP or online store
- List every place your business issues invoices: website, app, branches, sales team, and note which are standard (B2B) and which are simplified (B2C).
- Cover credit and debit notes, not only invoices.
- Collect the buyer fields you need for standard invoices, such as VAT number and address, at checkout or in the customer record.
- Plan onboarding for each invoicing unit, and store private keys and certificates securely, never in the app itself.
- Queue and retry submissions, so a temporary ZATCA outage does not stop sales, and alert your team to rejected invoices.
- Test on ZATCA’s sandbox before going live, and keep a record of every submitted XML and ZATCA response.
- Show invoices in Arabic; other languages can be added alongside.
- Assign an owner for future specification changes, because ZATCA updates its technical requirements over time.
How Whetstonez can help
We build and integrate invoicing inside custom platforms, including the APIs that connect your app, website and back office. See API development and integrations and custom software development, or read our custom software cost guide for budgeting. If you already have software, we can review what Phase 2 requires for your setup and estimate the work.
This article is general information, not tax advice. Confirm your obligations and deadlines with ZATCA (ZATCA e-invoicing) or your tax adviser.
