ZATCA Wave 25: Does Your Business Need to Integrate by 1 February 2027?

What ZATCA announced for Wave 25

On 24 July 2026, the Zakat, Tax and Customs Authority (ZATCA) set the criteria for the twenty-fifth wave of the e-invoicing Integration Phase, also called Phase 2.

You are in Wave 25 if your revenues subject to VAT exceeded SAR 187,500 in any one of these years: 2022, 2023, 2024 or 2025. One year above the threshold is enough.

ZATCA will notify taxpayers in this wave. They must integrate their e-invoicing solutions with the FATOORA platform no later than 1 February 2027. ZATCA gives each wave at least six months of notice before its deadline. If you think you are in scope, do not wait for the notice to start planning. Four months is not a long time for a system change.

• Threshold: VAT-subject revenue above SAR 187,500
• Test years: 2022, 2023, 2024 or 2025
• Deadline: integrate with FATOORA by 1 February 2027
• Notice: ZATCA notifies targeted taxpayers directly

Phase 1 was the starting point

Phase 1, the Generation Phase, began on 4 December 2021. It required VAT-registered businesses to issue invoices and notes from an electronic solution. Handwritten invoices and invoices edited in text tools stopped being acceptable. Simplified invoices also needed a QR code.

Most businesses have met Phase 1 for years. Phase 2 goes further. Your system must now connect to ZATCA and send each invoice in a set format. Many businesses find that the software they used for Phase 1 cannot do this. That is why each new wave triggers a round of system reviews and software changes. Plan for this early, so you have time to test before the deadline.

What integration means in Phase 2

Integration means your invoicing system talks to ZATCA's FATOORA platform through an API. The rules differ by invoice type.

Standard tax invoices, usually issued to other businesses, follow a clearance model. You send the invoice to FATOORA first. ZATCA validates it and returns it cleared. Only then do you share it with the buyer.

Simplified tax invoices, usually issued to consumers, follow a reporting model. Your system stamps the invoice and gives it to the customer. You must then report it to FATOORA within 24 hours.

• Invoices are created as XML following the UBL 2.1 structure, or PDF/A-3 with the XML embedded
• Each invoice carries a cryptographic stamp to prove its origin and integrity
• Each invoice has a unique ID (UUID) and a hash linked to the previous invoice
• A QR code allows basic checks through ZATCA's app
• Your system is onboarded to FATOORA and receives a Cryptographic Stamp Identifier (CSID)

Rules your e-invoicing solution must follow

ZATCA's guidelines also set controls on the software itself. The aim is to stop invoices being changed after they are issued.

A compliant solution must not allow the invoice counter to be reset. It must not allow the system date to be changed to back-date invoices. It must block deletion or editing of issued invoices. Each user needs their own login. Cryptographic keys must not be exported, and logs must not be altered. The system must also store the XML files it creates.

If your current tool fails any of these tests, integration alone will not make you compliant. Non-compliance with the e-invoicing rules can lead to penalties under ZATCA's regulations. Check the current violations and fines on zatca.gov.sa, as the details can change.

A readiness checklist for Wave 25

Use these steps as a working plan between now and the deadline. Start with the items that depend on other people, such as customer data and your software provider.

• Check your VAT-subject revenue for 2022 to 2025 against SAR 187,500 and watch for ZATCA's notice
• Confirm your software supports Phase 2 clearance and reporting
• Complete your company address in the national address format
• Collect buyer VAT numbers and full addresses for B2B customers
• Map each invoice type, credit note and debit note to the right flow
• Get access to the FATOORA portal and plan device onboarding
• Test clearance and reporting before you go live
• Train staff who issue invoices and handle rejections

Common mistakes to avoid

The biggest mistake is waiting for the notice before acting. Data clean-up and testing take longer than most teams expect.

Other mistakes come up often. Customer master data is incomplete, so standard invoices are rejected. Staff issue a standard invoice to the buyer before it is cleared. Simplified invoices are left unreported for more than 24 hours. Credit notes are raised outside the system. Some teams run a separate invoicing tool at a branch that was never onboarded.

Finally, e-invoicing does not replace your VAT return or Zakat filing. Those remain your responsibility. They are prepared by your own finance team or by a SOCPA-licensed provider. The same applies to audits.

• Starting too late
• Incomplete buyer data
• Sharing invoices before clearance
• Missing the 24-hour reporting window
• Unconnected branch or POS systems

Setting up Zoho Books for Phase 2

Zoho Books supports ZATCA Phase 2 e-invoicing for Saudi organisations. Setup follows a clear path.

First, complete your organisation details, including the full national address. Add Arabic names for customers and items, and full addresses and identification for B2B customers. Next, log in to the FATOORA portal, choose to onboard a new solution unit, and generate an OTP. The OTP is valid for one hour. Use it in Zoho Books to generate your CSID. Then give the right users permission to push transactions. Invoices are pushed to FATOORA, and Zoho Books tracks whether each one is pushed or failed.

FBS Advisory is a Certified Zoho Finance Partner. We help Saudi businesses online with Zoho Books setup, e-invoicing configuration, testing and staff training. We do not file VAT or Zakat returns or carry out audits in Saudi Arabia. Those stay with your business or your SOCPA-licensed provider.