On 24 July 2026 the Zakat, Tax and Customs Authority published the criteria for Wave 25 of Phase 2, and the number that matters is SAR 187,500. That is half the SAR 375,000 threshold that defined Wave 24, and halving a threshold at this end of the range does not add a few companies. It adds a category.
Businesses whose VAT-subject revenues exceeded SAR 187,500 in any of 2022, 2023, 2024 or 2025 must integrate their e-invoicing solution with the Fatoora platform by 1 February 2027. Note the four qualifying years. A single good year in 2022 puts you in scope even if the business has been quieter since.
Phase 1 and Phase 2 are different problems
Saudi e-invoicing has been running since December 2021, and a lot of businesses believe they are done because they generate compliant invoices. That is Phase 1, the generation phase, and it mostly meant your software produced a structured invoice with a QR code instead of a printed document.
Phase 2 is the integration phase, and it is a different technical undertaking. Your solution connects directly to Fatoora. Standard tax invoices are cleared by the authority before they reach the customer, which means a call to a government platform sits in the middle of your invoicing process. Simplified invoices are reported afterwards, within a defined window. Invoices carry cryptographic stamps and UUIDs. Your system needs onboarding credentials, certificate handling and a renewal process.
The practical difference is that Phase 1 was something your software did. Phase 2 is something your infrastructure does, continuously, and it fails in ways that stop you invoicing.
What actually goes wrong
Clearance in the critical path is the first surprise. If Fatoora is slow or your connection drops, a business that issues standard tax invoices at the counter needs a defined behaviour, not an error dialog. Deciding that behaviour is a business decision about whether you hold the sale, queue the invoice, or fall back, and it should be made deliberately rather than discovered.
Certificate lifecycle is the second. Cryptographic stamp identifiers are issued through onboarding and they expire. Businesses that treated onboarding as a one-off setup task find out when invoices start rejecting and nobody owns the renewal.
The third is the same master data problem every e-invoicing regime exposes. Buyer identifiers, VAT numbers, addresses and item descriptions that a human read past for years now face a validator that does not.
The fourth is the long tail of systems. A restaurant group with a point of sale, a delivery integration and an accounting package has three routes an invoice can take and needs all three cleared or reported correctly.
If you are newly in scope
Confirm your position first, using VAT-subject revenue across all four qualifying years rather than last year's figure alone. ZATCA notifies targeted taxpayers, but a notification is a prompt, not the moment to begin.
Then find out what your current software actually does. Many small Saudi businesses run accounting packages that were updated for Phase 1 and have a Phase 2 module available, sometimes at additional cost, sometimes requiring a version upgrade that has been deferred for two years. Others run something bespoke or something regional that has no Phase 2 path at all, and that is a replacement decision with a deadline attached.
Then test against the sandbox rather than in production. ZATCA provides a developer portal and a simulation environment, and the invoices that fail there are the ones that would have failed in February at your own counter.
One useful reframe: the businesses that got the most out of Phase 2 treated it as a reason to fix invoicing rather than a compliance tax. Clean structured invoice data is what makes reliable receivables reporting, honest revenue recognition and any kind of automation possible afterwards.
If you sell across the Gulf, the UAE is now running its own programme on a separate timetable and a different model, and the UAE deadlines and penalties are here. If your invoices originate in an online store, the Salla, Zid and Shopify comparison covers which platforms make this straightforward.
