Brief Introduction E-Invoicing in KSA
KSA implemented e-invoicing regulations to prevent taxpayers from generating handwritten or computer-generated invoices with non-standard formats and fields using text editing and various software. The e-invoicing regulation ensures that documents are generated and stored with all required fields and formats, including the QR code and other mandated elements, along with reporting to government authorities.
E-invoicing in KSA was rolled out in two phases, i.e., Phase-1, the generation phase enforced on 4th December 2021, requiring all the taxpayers (except non-resident taxpayers) subject to VAT to generate and store invoices in electronic format through a compliant e-invoicing generation solution (EGS) and include additional fields depending on the type of transaction. Phase 2, the Integration Phase, rolled out in waves starting 1st January 2023.
On 21st March 2025, the Kingdom of Saudi Arabia announced the 22nd wave of Phase -2 e-invoicing, effective from 31st December 2025 for the tax payers whose revenue is more than SAR 1 Mn.
Phase 2 – The Integration Phase
ZATCA has emphasized that Phase Two of E-invoicing aligns with Saudi Arabia’s broader economic development and digital transformation initiatives. Building on the success of Phase One, this next phase continues to drive progress, having already delivered key benefits such as enhanced consumer protection, increased taxpayer awareness, and a high rate of compliance with the initial Generation Phase.
22nd Wave of Phase-2 E-Invoicing
Phase 2 is rolled out in waves, and as stated above, on 21st March 2025, KSA announced the 22nd wave of Phase -2 e-invoicing integration, which includes all taxpayers whose revenues subject to VAT exceeded SAR 1 Mn during 2022, 2023, or 2024.
Further, ZATCA will notify the date not later than 31st December 2025 for all targeted taxpayers in the 22nd Wave to integrate their E-invoicing solutions with the Fatoora Platform.
Phase-2 e-invoicing Requirements
The integration phase requires taxpayers to have compliant e-invoicing solutions
- Having the ability to connect to the internet
- Integrated with the FATOORA portal
- Requires compliance with other additional fields as compared to Phase-1 requirement
- Must generate and store e-invoices in the specified format, i.e., PDF/A-3 with embedded XML or XML.
Historical Context: Previous Waves and Timelines
ZATCA has announced 22 waves to date and ensured each wave is informed at least six months before its integration date. While the 22nd wave is already discussed above, let’s have an overview of previous waves.
| Waves Under Phase-2 | Turnover Limit for VAT Registrant Taxpayers | Integration date |
| 21 | More than SAR 1.25 Million during FY 2022, 2023, 2024 | 30th November 2025 |
| 20 | Between SAR 1.5 million and SAR 1.75 million in FY 2022 or 2023 | 31st October 2025 |
| 19 | Between SAR 1.75 million and SAR 2 million in FY 2022 or 2023 | 30th September 2025 |
| 18 | Between SAR 2 million and SAR 2.5 million in FY 2022 or 2023 | 31st August 2025 |
| 17 | Between SAR 2.5 million and SAR 3 million in FY 2022 or 2023 | 31st July 2025 |
| 16 | Between SAR 3 million and SAR 4 million in FY 2022 or 2023 | 1st April 2025 |
| 15 | Between SAR 4 million and SAR 7 million in FY 2022 or 2023 | 1st March 2025 |
| 14 | Between SAR 5 million and SAR 7 million in FY 2022 or 2023 | 1st February 2025 |
| 13 | Between SAR 7 million and SAR 10 million in FY 2022 or 2023 | 1st January 2025 |
| 12 | Between SAR 10 million and SAR 15 million in FY 2022 or 2023 | 1st December 2024 |
| 11 | Between SAR 15 million and SAR 25 million in FY 2022 or 2023 | 1st June 2024 |
| 10 | Between SAR 25 million and SAR 30 million in FY 2022 or 2023 | 1st June 2024 |
| 9 | Between SAR 30 million and SAR 40 million in FY 2021 or 2022 | 1st June 2024 |
| 8 | Between SAR 40 million and SAR 50 million in FY 2021 or 2022 | 1st March 2024 |
| 7 | Between SAR 50 million and SAR 70 million in FY 2021 or 2022 | 1st February 2024 |
| 6 | Between SAR 70 million and SAR 100 million in FY 2021 or 2022 | 1st January 2024 |
| 5 | Between SAR 100 million and SAR 150 million in FY 2021 or 2022 | 1st December 2023 |
| 4 | Between SAR 150 million and SAR 250 million in FY 2021 or 2022 | 1st November 2023 |
| 3 | Between SAR 250 million and SAR 500 million in FY 2021 or 2022 | 1st October 2023 |
| 2 | Between SAR 500 million and SAR 3 billion in FY 2021 | 1st July 2023 |
| 1 | More than SAR 3 billion in FY 2021 | 1st January 2023 |
The timeline for the integration of the e-invoicing solution to the FATOORA portal for wave 1 to wave 15 has already expired we assume they are complying with integration phase requirements.
As the timeline for other waves is approaching, it is crucial for those taxpayers to stay compliant with regulations and ensure they have partnered with the ideal service provider and their e-invoicing solution is ready to comply with the regulation.
How Cygnet helps in KSA’s e-invoicing compliance
Cygnet’s e-invoicing solution is designed to assist businesses in Saudi Arabia with the ZATCA e-invoicing mandates. It facilitates seamless integration with existing business systems, ensuring compliance with Phase 2 requirements. The platform offers features such as real-time reporting, tamper-proofing, local archival, and the generation and storage of tax invoices with QR codes and unique sequencing. By adopting Cygnet’s solution, businesses can enhance efficiency, maintain compliance, and contribute to the Kingdom’s digital transformation initiatives.
Summary
With the announcement of the 22nd wave of Phase 2 e-invoicing in Saudi Arabia, compliance remains a top priority for businesses falling under ZATCA’s criteria. As deadlines approach, companies must ensure seamless integration of their e-invoicing solutions with the Fatoora platform. Staying ahead of regulatory requirements will not only streamline tax compliance but also contribute to the Kingdom’s broader digital transformation goals. Partnering with a reliable service provider, like Cygnet, can simplify compliance and enhance operational efficiency.
Author
Komal Vithalani
Content Writer
Komal Vithalani, a Chartered Accountant and Commerce graduate, is a dedicated professional committed to delivering value with years of expertise in navigating the complexities of indirect tax laws. Her practical excellence includes managing perplexed litigations, dispensing tactical tax advice, conducting thorough compliance checks, supervising audits, and crafting articulate and insightful content. At Cygnet, Komal seamlessly blends her profound understanding of tax regulations with cutting-edge tax technology. Leveraging her competence, she adeptly transforms complex tax tech jargon into concise, impactful, and engaging content. This not only aids readers in comprehending tax-related topics with enlightening clarity but also ensures the delivery of narratives that resonate broadly.
