ZATCA e-invoicing Phase 2: what to ask your software vendor

What Phase 2 actually requires

Phase 1 of the Saudi e-invoicing programme was about generation: stop issuing handwritten and unstructured invoices, produce them electronically instead. Phase 2 — “integration” — is a different order of requirement, because your software now has to talk to ZATCA’s Fatoora platform.

As of September 2026, Phase 2 requires an invoice to be issued as XML (UBL 2.1), or as PDF/A-3 with the XML embedded, carrying a cryptographic stamp, a UUID unique to that invoice, and a QR code, and reported to Fatoora in near real time. Standard tax invoices are cleared before they reach the buyer; simplified invoices are reported after issue. Penalties for violations have been reported in the range of SAR 5,000 to SAR 50,000.

Onboarding runs in waves. Wave 24 covers taxpayers whose VAT-able revenue exceeded SAR 375,000 in 2022, 2023 or 2024, with a deadline of 30 June 2026, and ZATCA notifies each group at least six months before its date. Waves, thresholds and dates are set by the authority and change; treat this as orientation and confirm your position with your accountant.

The questions to put in writing

The gap between “we support ZATCA” and “we are integrated with Fatoora” is where most of the disappointment in this market lives. Sales decks compress the two into one phrase. Contracts should not.

Ask every vendor, and keep the answers on paper:

1. Are you certified or listed by ZATCA for Phase 2, and under what name? Ask for the reference you can check.
2. Can you show a cleared standard invoice and a reported simplified invoice, from real data, in our own workspace? Watch the response come back from Fatoora, not from a demo fixture.
3. Who holds the cryptographic keys and the onboarding credentials — you, or the vendor?
4. What happens when a submission fails? Is the invoice queued and retried, and does the failure show somewhere a person will see it?
5. Is this included, or a separate charge, and does it change if we are onboarded in a later wave?
6. What is your position if the format changes? Every technical specification in this programme has been revised at least once.

Apply all six to Flowyana too. Our answer to the first is no: Flowyana does not claim ZATCA or Fatoora integration, certification, cryptographic stamping, or QR-coded clearance invoices. We would rather be plainly out of scope than let a compliance badge do work it cannot do. Filing formats and e-invoicing mandates differ by country and change over time; your accountant confirms what applies to you.

The foundations that must be right regardless

Whichever route you take to Fatoora, it can only transmit what your accounting already knows. A clearance integration on top of books that are wrong is a faster way to file the wrong thing.

VAT at 15%, split on every posting. Saudi defaults ship ready — 15% and 0% — and tax should be configuration rather than a hard-coded country, so rates and labels are yours to change when policy does. Every sale, purchase, expense and POS settlement should post a balanced double-entry voucher with the tax portion in its own ledger, and the tax summary should read from those postings rather than from a parallel calculation. If the summary and the trial balance can disagree, one of them is fiction.

Inclusive and exclusive pricing. A shop prices shelves inclusive of VAT; a contractor quotes exclusive. Both must work, and the split in the books must be identical either way.

Arabic and English on one document. Saudi invoices are read by Arabic-speaking customers and, often, by English-speaking accountants and auditors. Document templates should print paired Arabic–English labels on a single page across all 24 printable document types — invoice, quotation, receipt, credit note — rather than maintain two template sets that drift apart. The workspace itself runs in Arabic with right-to-left layout, so the people entering the data work in their own language. There is a fuller test in what to look for in bilingual documents.

Books you can close. A configurable financial year with lock dates on filed periods, so a corrected entry cannot quietly land in a quarter you have already reported.

Branches, if you have them. Records scoped per branch and enforced by the platform itself, not filtered in a dropdown — with reports that compare outlets or roll them up. If you also trade in the UAE, see the multi-country GCC guide.

A sensible order of work

Fix the books first; they are the part you use every day and the part any integration depends on. Then choose your route to Fatoora with your accountant, on evidence rather than adjectives. And keep the two decisions separate in your head, because vendors have every incentive to merge them.

To run the foundations list against Flowyana with your own VAT setup and Arabic documents, book a demo.