Saudi Arabia’s E-Invoicing Mandate Expands Again: What Wave 25 Means for Businesses

  • Saudi Arabia’s e-invoicing programme is entering a significant new stage of expansion, bringing a much broader group of businesses into the Phase 2 Integration requirements.

  • On 24 July 2026, the Zakat, Tax and Customs Authority (ZATCA) announced the criteria for Wave 25 of the Integration Phase of e-invoicing. The new wave covers taxpayers whose VAT-subject revenues exceeded SAR 187,500 in any one of the years 2022, 2023, 2024 or 2025. Targeted taxpayers will be required to integrate their e-invoicing solutions with the Fatoora platform by no later than 1 February 2027.

  • The announcement is particularly important for small and mid-sized businesses because the threshold is significantly lower than those used for several previous waves. Businesses that may previously have considered ZATCA’s Integration Phase primarily a concern for larger enterprises should now assess whether they fall within the latest criteria.

  • For finance and tax teams, the priority should be straightforward: review historical revenue, determine applicability, assess existing invoicing systems and begin addressing technical and process gaps well before the compliance deadline.

Understanding Wave 25

  • Saudi Arabia’s e-invoicing programme, known as Fatoora, was introduced in two main phases.

  • Phase 1, the Generation Phase, became effective on 4 December 2021. It requires taxpayers subject to the e-invoicing regulations to generate and store electronic invoices and associated notes through a compliant electronic solution.

  • Phase 2, the Integration Phase, began on 1 January 2023 and is being implemented progressively through waves. It introduces additional requirements, most notably the integration of taxpayers’ e-invoicing solutions with ZATCA’s Fatoora platform, the use of specified invoice formats and additional invoice fields.

  • For businesses looking to understand the wider Saudi tax and compliance environment, BNC Global’s Saudi Arabia advisory services provide information on tax, accounting, risk and compliance services in the Kingdom.

  • Under Wave 25, ZATCA has set the selection criterion at VAT-subject revenues exceeding SAR 187,500 during 2022, 2023, 2024 or 2025. Taxpayers targeted under the wave will be notified by ZATCA and must integrate their solutions with Fatoora by 1 February 2027.

  • Businesses should review ZATCA’s official Wave 25 announcement for the published criteria and deadline.

Why Smaller Businesses Need to Pay Attention

  • For a large organisation with an established ERP, dedicated finance team and internal IT function, e-invoicing integration may be managed as a structured technology project.

  • For a smaller business, the situation can be very different.

  • A café may rely on a point-of-sale system. A boutique may use separate retail and accounting software. A professional services business may issue invoices through accounting software or a cloud application. A small owner-managed company may have only a few people responsible for finance and administration.

  • These businesses can still face significant implementation requirements.

  • The key issue is therefore not simply whether a business can produce an electronic invoice. Phase 2 requires compliant electronic invoicing and integration with ZATCA’s Fatoora platform.

  • Consequently, a business should not assume that an existing PDF invoice, accounting application or basic digital invoicing tool automatically satisfies Phase 2 requirements.

The Technical Dimension

One of the most important aspects of Phase 2 is the technology behind the invoice.

ZATCA publishes technical requirements covering invoice specifications, data structures, security requirements and other implementation considerations. Its educational library includes detailed guidance covering Fatoora, invoice specifications, the data dictionary and security specifications for e-invoicing applications.

Businesses preparing for Wave 25 should therefore review whether their existing invoicing environment can support the applicable functionality.

The assessment should cover:

  • Generation of compliant electronic invoices

  • Required invoice data and fields

  • Applicable invoice and credit/debit note formats

  • QR-code requirements

  • Security and integrity controls

  • Integration with ZATCA’s Fatoora platform

  • Relevant API and connectivity requirements

  • Invoice storage and retrieval

  • Processes for handling errors, cancellations and adjustments

  • Compatibility between invoicing, accounting and ERP systems

  • ZATCA defines an electronic invoice as a tax invoice generated in a structured electronic format through electronic means. A paper invoice that has simply been scanned or converted into an electronic file does not qualify as an electronic invoice under the authority’s definition.

  • Businesses can consult ZATCA’s E-Invoicing Educational Library for the latest technical and security guidance.

  • The objective is not simply to purchase software. It is to ensure that the entire invoicing process, from transaction capture through issuance, integration and accounting records, works consistently.

Revenue History Is the First Check

  • For businesses concerned about Wave 25, one of the first practical steps should be determining whether their historical revenue meets the published selection criterion.

  • The relevant test is not simply current-year turnover.

  • ZATCA’s Wave 25 announcement refers specifically to VAT-subject revenues exceeding SAR 187,500 during 2022, 2023, 2024 or 2025.

  • Finance teams should therefore review historical records rather than relying exclusively on the current year’s revenue.

  • This review should be properly documented. Businesses should identify the relevant revenue figures, determine how VAT-subject revenue applies to their circumstances and retain supporting accounting and VAT records.

  • This is particularly important for owner-managed businesses, where financial information may be spread across bank records, accounting systems, point-of-sale platforms and manually maintained records.

  • A documented assessment can also make subsequent discussions with tax advisers, auditors and technology providers considerably more efficient.

Compliance Is More Than an IT Project

  • A common mistake is to treat e-invoicing as a software implementation alone.

  • The technology is important, but the underlying business processes matter just as much.

  • Consider a business that sells products through several channels. Its invoices may originate from a retail system, an online store and manual sales processes. If each channel handles customer information, tax treatment, invoice numbering and credit notes differently, integrating the systems may expose inconsistencies that were previously difficult to identify.

  • A readiness assessment should therefore consider both technology and process.

1. Customer and Supplier Data

Are tax identification numbers, addresses and other relevant details captured accurately?

2. Tax Treatment

Are VAT rates, exemptions and transaction classifications being applied consistently?

3. Invoice Workflows

Who creates, reviews and approves invoices?

4. Credit and Debit Notes

Can the system generate the relevant documents correctly and maintain the required relationship with original transactions?

5. Accounting Integration

Does the invoicing system communicate reliably with the general ledger and VAT reporting processes?

6. Record Retention

Can invoices and supporting records be retrieved when required?

7. Staff Procedures

Do employees understand how the new system should be used and what to do when an invoice fails validation or requires correction?

These questions become increasingly important as an organisation moves from a basic digital invoicing process toward an integrated compliance environment.

Start Before the Deadline

  • ZATCA has stated that Phase 2 is implemented in waves and that targeted taxpayers are informed at least six months before their integration date.

  • That notification period should not necessarily be treated as the starting point for implementation.

  • Technology selection, contract negotiations, system configuration, data cleansing, testing, employee training and integration can all require time. Businesses may also discover that their existing accounting or point-of-sale platform requires an upgrade or replacement.

  • A practical readiness programme can be divided into several stages.

Stage 1: Determine Applicability

Review VAT-subject revenue for 2022–2025 and assess whether the business falls within the Wave 25 criterion.

Stage 2: Map the Current Process

Document how invoices are currently created, approved, issued, stored and recorded in the accounts.

Stage 3: Assess Technology

Identify the invoicing, accounting, ERP, POS and other systems involved and assess their compatibility with Phase 2 requirements.

Stage 4: Identify Gaps

Compare the current environment against ZATCA’s applicable technical and business requirements.

Stage 5: Implement and Test

Configure or upgrade the solution, establish integration with Fatoora and conduct appropriate testing before the applicable deadline.

Stage 6: Train and Monitor

Train finance and operational teams and establish procedures for monitoring invoice errors, system connectivity and ongoing compliance.

What Wave 25 Signals for the Market

  • The significance of Wave 25 extends beyond the individual businesses receiving notifications.

  • The programme demonstrates the continuing expansion of Saudi Arabia’s digital tax infrastructure. ZATCA describes Phase 2 as part of the Kingdom’s wider economic development and digital transformation.

  • For businesses, this means finance and tax processes increasingly need to operate as connected digital systems rather than isolated administrative activities.

  • For smaller organisations in particular, the transition can also provide an opportunity to address weaknesses that may already exist in invoicing and financial controls.

  • Automated invoicing can help standardise transaction data, improve record availability and reduce dependence on manual processes. At the same time, implementation requires careful attention to data quality, system configuration and applicable compliance requirements.

    Preparing for 1 February 2027

  • Wave 25 gives affected businesses a defined target date: 1 February 2027.

  • The practical priority is therefore a structured readiness assessment rather than waiting until the final months before integration.

  • Management should establish whether the organisation meets the Wave 25 revenue criterion, determine whether a ZATCA notification has been received, review the current invoicing architecture and identify the changes required.

  • For finance and tax teams, this can also be an opportunity to bring tax, accounting and IT stakeholders together. E-invoicing touches all three functions, and implementation problems can occur at the points where those responsibilities overlap.

  • Businesses should work from ZATCA’s current published guidance and technical documentation because detailed implementation requirements can vary according to the transaction and invoicing environment.

    Turning Compliance Into Readiness

  • Saudi Arabia’s Wave 25 announcement brings a significantly broader group of businesses into the next stage of e-invoicing integration.

  • For businesses that meet the SAR 187,500 VAT-subject revenue criterion in any relevant year from 2022 to 2025, the issue is no longer simply whether they use electronic invoices. The focus is on whether their systems, data and processes can meet Phase 2 requirements and integrate with Fatoora by the applicable deadline.

  • The most useful first step is straightforward: check the historical revenue criterion, map the existing invoicing process and perform a technology gap assessment.

  • With the integration deadline set for 1 February 2027, businesses have an opportunity to address gaps methodically rather than treating compliance as a last-minute technology exercise.

  • For organisations that need broader finance and tax support, BNC Global’s Tax Outsourcing Services cover tax compliance and related financial support for businesses operating across jurisdictions.

  • BNC Global can support organisations with tax and compliance processes, financial operations and readiness activities as they navigate changing regulatory requirements.

Key Takeaways

  • Wave 25 applies to taxpayers whose VAT-subject revenues exceeded SAR 187,500 in 2022, 2023, 2024 or 2025.

  • Targeted taxpayers must integrate their e-invoicing solutions with Fatoora by 1 February 2027.

  • Phase 2 involves more than generating digital invoices; it includes integration, specified formats and additional invoice fields.

  • Businesses should review their historical revenue, invoicing processes, accounting systems and technology architecture.

  • ZATCA’s official technical guidance should be used when assessing implementation requirements.

  • Starting the readiness process early allows businesses more time for system changes, testing, data preparation and staff training.

For businesses in Saudi Arabia, the relevant next step is to determine whether Wave 25 applies and assess whether their invoicing systems and processes are ready for Phase 2 integration.