The Zakat, Tax and Customs Authority (ZATCA) launched the Fatoora e-invoicing mandate as a cornerstone of Saudi Arabia's digital tax transformation. All VAT-registered businesses must issue invoices electronically according to precise technical standards set by ZATCA.
Phase 1: Generation Stage (December 2021)
All VAT-registered businesses were required to:
- Issue invoices digitally (not just scanned paper)
- Include a QR code on all B2C invoices
- Store invoices in a secure, retrievable system for 6 years
- Comply with UBL XML or PDF/A-3 format standards
Phase 2: Integration Stage (2023–Ongoing)
Phase 2 is significantly more demanding — it requires direct API integration with ZATCA's systems. It is being rolled out progressively from largest to smallest taxpayers.
- B2B invoices: Must be submitted to ZATCA for "Clearance" before being sent to the buyer
- B2C invoices: Must be "Reported" to ZATCA within 24 hours of issuance
- UBL XML format is mandatory for all invoice types
- Digital signature using ECDSA cryptography required on every invoice
Mandatory Invoice Components
| Component | Mandatory For |
|---|---|
| Seller's VAT registration number | All invoices |
| Unique invoice UUID | All invoices |
| Encoded QR code | B2C invoices |
| ECDSA digital signature | Phase 2 (all) |
| ZATCA Cryptographic Stamp | B2B clearance |
| ISO 8601 date format | All invoices |
Penalties for Non-Compliance
- Non-compliance with Phase 1: Fine up to SAR 50,000
- Failure to integrate in Phase 2: Warning, then escalating fines
- Tampering with invoice data: Heavy financial penalty + criminal prosecution
5 Steps to Get Ready for ZATCA Phase 2
- Week 1: Assess your current accounting system — does it support Phase 2?
- Week 2: Obtain a Certificate Signing Request (CSR) from ZATCA
- Month 1–2: Test API integration in ZATCA's Sandbox environment
- Month 3: Go live in the Production environment
- Ongoing: Monitor invoice acceptance rates and resolve rejection errors immediately
What to Look for in a ZATCA-Compliant Solution
- ZATCA certification for the software solution
- Direct API connection to ZATCA Production environment
- Automatic QR code generation and digital signing
- UBL XML support compliant with FATOORA standards
- Complete audit log for every invoice
- Secure 6-year invoice archive
Erpegy's ERP solution covers all these requirements out of the box: automatic XML generation, digital signatures, QR codes, direct ZATCA API submission, and secure archiving — with zero manual intervention required.