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What is ZATCA Phase 2 e-invoicing?

By The BIZA team2026-05-283 min read

If you run a VAT-registered business in Saudi Arabia, you have almost certainly heard the word ZATCA more than you would like. This guide explains what Phase 2 e-invoicing actually is, in plain language, and what it means for the way you issue invoices.

The short version

ZATCA (the Zakat, Tax and Customs Authority) rolled out electronic invoicing in two phases:

  • Phase 1 — Generation. From December 2021, businesses had to stop issuing handwritten or simple PDF invoices and start generating structured electronic invoices from compliant software, including a QR code on simplified invoices.
  • Phase 2 — Integration. From 2023 onward, in waves, businesses also have to integrate their invoicing system with ZATCA's platform (Fatoora), so that invoices are reported to or cleared by ZATCA in a defined technical format.

Phase 1 was about how invoices are created. Phase 2 is about connecting that creation to ZATCA.

What "integration" really means

Under Phase 2, invoices move in a specific structured format (XML, following the UBL standard) and carry cryptographic elements so they cannot be silently altered after the fact. There are two flows:

  1. Standard tax invoices (typically B2B) follow a clearance model — the invoice is sent to ZATCA and returned with a cryptographic stamp before it is considered valid.
  2. Simplified tax invoices (typically B2C) follow a reporting model — the invoice is issued with a QR code and reported to ZATCA within a set window.

The practical point for a business owner: your invoicing system needs to produce the right document structure, keep an auditable sequence, and talk to ZATCA in the way your wave requires.

Who is affected, and when

ZATCA has been onboarding businesses into Phase 2 in waves, based on annual revenue, with each wave given a go-live date and several months of notice. The thresholds have stepped down over time, pulling progressively smaller businesses into scope. If you are VAT-registered and growing, the safe assumption is that Phase 2 either already applies to you or will.

This article is a general explainer, not tax advice. Always confirm your wave, dates, and obligations against ZATCA's official guidance or your tax advisor.

How to get ready

You do not need to become an e-invoicing expert — you need software that handles the mechanics. Practically, get these in order:

  • Clean master data. Accurate buyer and seller details, VAT numbers, and tax treatment per item.
  • Structured invoicing. Invoices generated from a system, not typed into a document, with a reliable sequence.
  • Bilingual documents. Arabic and English presentation of the required fields.
  • An audit trail. A record of every change, so a compliance review is a lookup rather than an investigation.

Where BIZA fits

BIZA App is built for ZATCA e-invoicing workflows. VAT is captured on the documents your team already works in, invoices follow auditable structures, and every change is recorded in the audit log. If you are moving off spreadsheets or a Phase 1-only setup, that foundation is the hard part — and it is already in place.

If you want to talk through your specific wave and setup, contact the BIZA team — we are based in Al-Khobar and work with Saudi businesses every day.