If you sell in Saudi Arabia and your VAT-able revenue passed SAR 187,500 in any year from 2022 to 2025, ZATCA's Wave 25 puts you inside Phase 2 e-invoicing, and you must be connected to its Fatoora platform by 1 February 2027. The line used to sit at SAR 375,000, so a lot of small shops that thought they were safe are now on the list. This guide sets out what ZATCA's own announcement and technical guideline say: who is in Wave 25, what changes on the day you go live, what the penalties are, and a plan that fits in the four months you have left.
Wave 25 cuts the threshold in half, so small shops are now in scope
ZATCA announced Wave 25 on 24 July 2026. Its criteria are plain: every taxpayer whose revenue subject to VAT exceeded SAR 187,500 in 2022, 2023, 2024 or 2025. ZATCA says it will notify each targeted taxpayer directly, and the deadline to integrate with the Fatoora platform is 1 February 2027.
The wave before it, Wave 24, used SAR 375,000 (for 2022 to 2024) and had a deadline of 30 June 2026, according to ZATCA's Wave 24 notice. EY notes that Wave 25 is the first to count calendar year 2025 revenue, which pulls in businesses that crossed the line only last year. SAR 187,500 is about SAR 15,600 a month on average. That is a corner shop, a small clinic or a one-van trading firm, not a corporate.
You should not wait for a letter. ZATCA's guideline says target groups are notified "at least six months in advance". Counting back from 1 February 2027 puts the latest notice around the start of August 2026. That is our arithmetic, not a ZATCA statement. If you cleared SAR 187,500 in any of those four years and have heard nothing, ask your tax adviser or ZATCA's call centre on 19993 whether you are in the wave.
What Phase 2 asks of you, in plain terms
Phase 1 began on 4 December 2021 and simply stopped you issuing handwritten or basic computer invoices. Phase 2, the Integration phase, has applied in waves since 1 January 2023. The difference is that your invoicing software now talks to ZATCA while you work. The technical guideline (version 2, May 2023) splits invoices into two kinds, and the two follow different rules:
| Question | Standard tax invoice | Simplified tax invoice |
|---|---|---|
| Usually used for | Business to business and business to government sales | Mostly sales to consumers |
| What you send ZATCA | The invoice goes to ZATCA for clearance before you share it with the buyer | You stamp it yourself, hand it over, then report it to ZATCA |
| Timing | Real time | Within 24 hours of issuing it |
| Who adds the stamp and QR code | ZATCA, when it clears the invoice | Your own system, using the certificate ZATCA issued to it |
| Credit and debit notes | Cleared the same way | Reported the same way |
Behind both sits the same set-up. Your invoicing system, which ZATCA calls an e-invoice generation solution, must be onboarded through the Fatoora portal, which gives it a Cryptographic Stamp Identifier (CSID). Invoices are produced as XML, or as PDF/A-3 with the XML embedded, and the simplified invoice's QR code must follow the Phase 2 format of nine tags. ZATCA offers a sandbox, an SDK and a web validator so you can test before you go live.
The rule that changes how you work: a standard invoice is not valid until ZATCA clears it
This is the sentence in the guideline that matters most to an owner. Each standard tax invoice "must be cleared by the Authority as a prerequisite for sharing them with the buyers and for such Electronic Invoice to be regarded as legal and valid". Under Phase 1 you could issue the invoice and email the PDF. Under Phase 2 for B2B sales, the PDF you email before clearance is not a valid invoice.
That changes daily habits in three ways:
- Billing becomes a two-step job. Create the invoice, get it cleared, then send it. If your accountant used to prepare invoices in a batch at month end, that stops working.
- A failed clearance is a stopped sale. If ZATCA rejects an invoice for a bad buyer VAT number or a wrong total, you fix it before the customer sees it. This is annoying on the first day and useful on every day after.
- Consumer sales get slack, but not forever. A simplified invoice may be reported within 24 hours, so a shop with a patchy connection can still serve customers. The invoice is still stamped and carries its QR code at the till.
Phase 2 does not ask for more paperwork. It moves the check from ZATCA's audit, months later, to the moment you press save.
What you gain if you do it properly
Compliance posts usually read as a list of threats, so here is the other side. These are our opinions, based on how the rules work, not promises from ZATCA:
- Errors surface on the day. A wrong VAT number or a mismatched total is rejected at clearance, not found in an audit a year later. You correct one invoice instead of untangling a quarter.
- Your buyers can trust your invoice. A cleared invoice carries ZATCA's stamp, which means a business customer can rely on it for their own VAT claim without chasing you to re-issue it.
- One system of record. The guideline links each invoice to the one before it with a "previous invoice hash" and a counter that cannot be reset. A clean, unbroken sequence is also a clean sales ledger.
- Less reconciliation. When the sales system and the tax authority hold the same invoices, the monthly "does my VAT return match what I issued" check mostly disappears.
Where first integrations go wrong
None of these is a ZATCA surprise. Each follows from a rule in the technical guideline:
- Sharing a standard invoice before it is cleared. The invoice is not valid yet. Build the order of steps into the software so nobody can email a draft.
- Treating the PDF as the invoice. What you send ZATCA is the XML. The guideline says clearance and reporting submissions are XML, not PDF/A-3, so check that your system submits the right file.
- Editing or deleting after issue. The sequence is chained by hash, and the counter cannot be reset. A mistake is fixed with a credit or debit note, never by deleting the original. The penalties below make this expensive to get wrong.
- Letting the 24-hour reporting window lapse. The window is generous, but a till that goes offline for a weekend and never sends its queue is a breach. You need a queue that retries and shows what is still unsent.
- Testing only the happy path. Run all three document types in the sandbox before go-live: a standard invoice, a simplified invoice and a credit note. Use the web validator, not only your own checks.
What the penalties are, and what the fines amnesty does not cover
ZATCA published its e-invoicing violations when Phase 1 began. As reported by Argaam from ZATCA's statement, not issuing and archiving an e-invoice carries a fine of SAR 5,000, and cancelling an e-invoice after issuing it carries SAR 10,000. A missing QR code, a missing buyer VAT number or failing to tell ZATCA about a fault that stops invoicing start with a warning. Fines escalate with repetition. These are the figures announced in 2021. We could not open ZATCA's own page for that notice today, so confirm the current amounts with ZATCA or your adviser before you budget for them.
There is also a fines initiative running to 31 December 2026, announced on 29 June 2026. It cancels fines for late registration, late payment, late filing and VAT return corrections, if you file your outstanding returns and pay the tax. Its announcement does not mention e-invoicing violations, so do not assume it covers them.
A plan that fits the four months you have
- October. Confirm whether you are in Wave 25. Pull your VAT-able revenue for 2022 to 2025 and ask your adviser to check it against SAR 187,500. List every place an invoice is issued: tills, a back-office system, a spreadsheet, a delivery app.
- November. Choose the system. Ask each vendor to show you device onboarding, a cleared standard invoice, a reported simplified invoice and a credit note, running against ZATCA's own validator.
- December. Test in the sandbox, with real products and real customer VAT numbers. Train whoever raises invoices on the clear-before-send rule.
- January. Go live early, with two weeks of margin. Do not discover on 31 January that onboarding needs a document you do not have.
Your next step
If you already run Pakistani and Saudi operations, or you are comparing systems, our Accounts module handles ZATCA Phase 2 through its Tax Filing add-on: device onboarding to a CSID, signed XML with the QR code, standard invoices cleared and simplified ones reported, chosen from whether the buyer has a VAT number, and checked against ZATCA's own compliance endpoint. The same system also handles Pakistan's rules, which we cover in our FBR digital invoicing guide. For a wider view of what a small business should expect from its software, read ERP for small businesses. If a shop-floor system is part of the picture, see our point-of-sale module.
Not sure whether you are in Wave 25 or which of your invoices count as standard or simplified? Tell us how you invoice today and we will say honestly whether our system fits. This guide explains ZATCA's published rules and is not tax advice. Your adviser or ZATCA should confirm your wave and your date.
