ZATCA E-Invoicing Explained for Small Businesses (2026)

Saudi Arabia was the first GCC country to make electronic invoicing compulsory, and the rules now reach far beyond big companies. With ZATCA's 25th integration wave lowering the revenue threshold to SAR 187,500, many small shops, cafés and freelancers are now asking the same questions: what is Fatoora, which phase am I in, and what do I actually need to do? This guide explains ZATCA e-invoicing in plain language, including what a simple PDF invoice tool can and cannot do for you.

What is ZATCA e-invoicing (Fatoora)?

E-invoicing means issuing invoices, credit notes and debit notes through an electronic system in a structured format, instead of by hand. The programme is run by the Zakat, Tax and Customs Authority (ZATCA) and is known as Fatoora (فاتورة).

According to ZATCA, the rules apply to all persons subject to VAT, and to anyone issuing tax invoices on behalf of a VAT-registered supplier. Non-resident taxable persons are excluded. In practice, if your business is registered for VAT in Saudi Arabia, e-invoicing applies to you.

Two points often confuse people:

• A paper invoice that is scanned or copied into a PDF is not an e-invoice.
• ZATCA says that handwritten invoices and invoices typed in text-editing tools (for example a Word or Excel template) are not e-invoices either.

Phase 1 (Generation): what has applied since 4 December 2021

Phase 1 has been in force for all in-scope taxpayers since 4 December 2021. It does not require any connection to ZATCA. Instead, it requires you to:

1. Stop issuing manual invoices and generate and store invoices and notes using a compliant electronic system.
2. Add the invoice title ("Tax Invoice" or "Simplified Tax Invoice") to each invoice.
3. Add the buyer's VAT number on tax invoices when the buyer is VAT registered.
4. Add a QR code on simplified tax invoices (it is optional on standard tax invoices in Phase 1).
5. Keep electronic copies of all invoices you issue.

The system you use must also avoid ZATCA's "prohibited functionalities". These include uncontrolled access (for example anonymous users or no user sessions), the ability to tamper with or delete invoices or logs, and running more than one invoice sequence from the same unit. ZATCA's FAQ also notes that no specific file format is required in Phase 1, but invoices must come from a system that meets these rules.

Phase 2 (Integration): waves and who is in scope

Phase 2 started on 1 January 2023 and is rolled out in waves. Each wave is defined by VAT-subject revenue in past years, and ZATCA notifies taxpayers at least six months before their integration date. The most recent waves, as reported by EY, are:

For context, SAR 375,000 is the mandatory VAT registration threshold in Saudi Arabia and SAR 187,500 is the voluntary registration threshold. So Wave 25 brings in most small VAT-registered businesses. If you received a ZATCA notification, follow the exact dates in it, because that is your official deadline.

What Phase 2 requires

• Invoices are created in a structured XML format (UBL 2.1), with a unique ID (UUID), an invoice hash and a cryptographic stamp. A PDF can still be shared with the customer, but the XML is the legal record.
• Your invoicing solution must be onboarded with ZATCA through the Fatoora portal and receive a cryptographic stamp identifier (CSID).
• Standard tax invoices (B2B) must be sent to ZATCA for clearance before you share them with the buyer.
• Simplified tax invoices (B2C) are given to the customer at the time of sale and must be reported to ZATCA within 24 hours.

Standard vs simplified tax invoice in Saudi Arabia

ZATCA uses two invoice types. The one you issue depends on who your customer is, not on how big your business is.

Example: a café sells a customer two coffees and a cake for SAR 200 before VAT. VAT at 15% is SAR 30, so the total is SAR 230. The café issues a simplified tax invoice with a QR code. If a company buys SAR 20,000 of catering from the same café, the café issues a standard tax invoice showing the company's VAT number.

The ZATCA QR code explained

The QR code is not supplied by ZATCA; your invoicing system creates it. The data is stored in TLV format (Tag, Length, Value) and then Base64 encoded. In Phase 1, the QR code must contain at least these five fields:

1. Seller's name
2. Seller's VAT registration number
3. Invoice date and time (time stamp)
4. Invoice total, including VAT
5. VAT total

In Phase 2, the QR code also carries security data: the hash of the XML invoice, the digital (ECDSA) signature and the public key, and for simplified invoices the stamp signature linked to ZATCA's certificate. These extra fields can only be produced by an onboarded e-invoicing solution, which is why a normal invoice tool cannot create a valid Phase 2 QR code.

What a small business should actually do

1. Check your revenue. Look at your VAT-subject sales for 2022 to 2025. If any year is above SAR 187,500, you are likely in Wave 25 or an earlier wave.
2. Check the ZATCA portal and your email for an integration notification, and note the date.
3. Choose a ZATCA-compliant e-invoicing solution (POS, accounting software or ERP) that supports Phase 2 integration. Ask the provider to confirm it can complete onboarding and clearance.
4. Clean your master data. Make sure your VAT number, commercial registration, address and your B2B customers' VAT numbers are correct.
5. Onboard and test through the Fatoora portal well before your deadline.
6. Train staff to correct mistakes with credit or debit notes, never by deleting or editing invoices.

Penalties in brief

ZATCA has published a list of e-invoicing violations. As summarised by Deloitte, fines depend on the type of violation and how often it is repeated, and can reach SAR 50,000 for issues such as not issuing or storing e-invoices, missing QR codes on simplified invoices, or deleting or changing invoices. For some violations a warning is given first. The best protection is simply to use a compliant system and keep your records.

What a PDF invoice generator can and cannot do

We want to be clear about this, because it affects your compliance. GCCInvoice is a free PDF invoice generator. It can add a QR code with the five Phase 1 fields to SAR invoices that include your VAT number, show VAT at 15%, print in Arabic and English, and let you share invoices by WhatsApp. However:

• It is not a ZATCA-certified Phase 2 solution. It does not create UBL XML, does not onboard with ZATCA, and does not clear or report invoices.
• If you are in a Phase 2 wave, your tax invoices must come from an integrated solution, not from a PDF tool.
• Even for Phase 1, ZATCA expects a system with user controls and anti-tampering features. If you are VAT registered, confirm that your invoicing tool meets those rules.

Where a PDF generator is useful:

• Businesses not registered for VAT, who need professional invoices without VAT.
• Quotations and proforma invoices, which are not tax invoices.
• Receipts and payment confirmations for your own records.
• Customers outside Saudi Arabia in other GCC countries, where different rules apply.

Key takeaways

• E-invoicing applies to all VAT-registered businesses in Saudi Arabia; Phase 1 has applied since 4 December 2021.
• Handwritten invoices and Word or Excel templates do not count as e-invoices.
• Wave 25 covers revenue above SAR 187,500 in any year from 2022 to 2025, with integration from 1 February 2027.
• In Phase 2, B2B invoices are cleared before sharing and B2C invoices are reported within 24 hours.
• A PDF generator is helpful for quotations, proformas and non-VAT invoices, but it is not a Phase 2 solution.

Frequently asked questions

I am not registered for VAT. Does e-invoicing apply to me?

ZATCA's e-invoicing rules apply to persons subject to VAT. If you are not VAT registered, you should not issue tax invoices or charge VAT, but you can still send normal commercial invoices. If your sales are approaching SAR 375,000 a year, check whether you must register.

Can I send a simplified tax invoice by WhatsApp?

ZATCA says a printed copy of a simplified tax invoice must be given to the customer, but it can be shared electronically instead if the seller and buyer agree.

Do I need a new system to connect to Fatoora?

Not necessarily new, but it must be able to integrate with ZATCA. Many POS and accounting providers have upgraded their products. Ask your provider for written confirmation.

What if I receive an advance payment?

ZATCA's FAQ says an advance payment should lead to an electronic invoice, not only a receipt voucher.

For quotations, proformas, receipts or invoices for businesses not yet using an integrated system, you can try our Saudi invoice generator or the general tax invoice generator, with Arabic and English PDFs and SAR totals.

This article is general information, not tax or legal advice. ZATCA rules and wave dates can change, so please check with ZATCA or a qualified tax adviser before acting. Last reviewed: October 2026.