Saudi e-invoicing: what does Phase 2 ask of your business?

The Zakat, Tax and Customs Authority (ZATCA) introduced e-invoicing in two phases. Phase 1, “generation”, began on 4 December 2021. Phase 2, “integration”, began on 1 January 2023 and is applied to businesses in successive waves, with each business notified of its wave in advance. If Phase 1 changed how an invoice is written, Phase 2 changes how it leaves your business: an invoice is no longer a document you print and send, but a record that passes through the authority.

The two phases in brief

• Phase 1: invoices and notes are issued from a compliant electronic solution with the fields the authority defines; handwritten invoices are no longer accepted, and simplified invoices carry a QR code.
• Phase 2: the same solution is connected to the authority’s FATOORA platform, and invoices are sent to it in a standard format, either for clearance before delivery or for reporting after issue.

What changes in Phase 2?

• Your system’s invoicing unit is registered with the authority using a one-time code (OTP) issued from the FATOORA portal, and receives a digital certificate specific to your business.
• Every invoice is built in a standard XML format, carries a unique identifier and a cryptographic stamp, and is hash-chained to the previous invoice, so a document cannot silently disappear from the sequence.
• Standard tax invoices between businesses are sent for clearance before they reach the buyer; simplified invoices to consumers are reported within 24 hours of issue.
• An issued invoice is never edited or deleted. Corrections are made with a credit or debit note that references the original invoice and follows the same path.

Standard and simplified invoices: two different paths

With a standard invoice the buyer waits for the authority’s response: it cannot be delivered before clearance, and it must carry the buyer’s VAT number and address. A simplified invoice is handed to the customer immediately and reported afterwards. So an error in a business customer’s details stops that invoice on the spot, while an error on a simplified invoice surfaces after the customer has already left.

Common reasons invoices get stopped

• A missing buyer VAT number or address on a standard tax invoice.
• A zero-rated or exempt line without the exemption reason the authority requires.
• A credit note that does not reference its original invoice, or exceeds what remains of it.
• Totals that differ from the sum of their lines because of rounding.
• Invoices issued from another program that is not connected, so they never reach the authority at all.

A readiness checklist before your wave

• Review your establishment profile: VAT number, commercial registration and national address exactly as registered with the authority.
• Complete your business customers’ details — VAT number and address — before an urgent invoice needs them.
• Map every service or item to its correct tax category, and set the exemption reason for anything exempt or zero-rated.
• Decide who approves an invoice before it goes out, because a correction after submission is a note, not an edit.
• Have the person with access to the FATOORA portal ready to issue the OTP on the day of onboarding.
• Run a full cycle: a standard invoice, a simplified invoice and a credit note against one of them, and follow the authority’s response to each.

What does that mean for your accountant?

Mistakes after issue are now expensive: there is no “quick edit” on a submitted invoice. You need software that prevents mistakes before issue: tax calculated by one engine, approval before submission, approved documents locked, and the authority’s response shown in plain language.

How Arttop 360 handles it

The FATOORA integration is built into the program’s own server, not routed through an intermediary. You enter the OTP in your establishment profile, the program registers the invoicing unit and passes the compliance checks, and every invoice and note is then sent automatically once it is approved. You follow each document in the «ZATCA tracking» screen — queued, cleared or reported, or rejected, and why. The authority replies in English, so its message is kept as received and an Arabic explanation of every rule it cites is added beneath it.

In a Saudi establishment, an issued tax document can be neither unapproved nor deleted; the correction is a credit note followed by a new invoice. A document the authority rejected and never accepted can be reopened for correction by the establishment’s administrator with a written reason, then approved and sent again under the same number.

Related pages

• E-invoicing in Arttop 360
• Accounting and finance