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ZATCA e-invoicing: what it means for your POS and accounting systems

Since December 2021, VAT-registered businesses in Saudi Arabia have had to issue electronic invoices from compliant systems. For most businesses the work is not in the rules but in the systems that produce the invoices.

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The two phases

The Zakat, Tax and Customs Authority (ZATCA) introduced e-invoicing, known as Fatoora, in two phases.

  • Generation, from 4 December 2021: invoices are created and stored electronically by a compliant solution, and simplified (business-to-consumer) invoices carry a QR code.
  • Integration, from 1 January 2023 and applied in waves: the invoicing system connects to ZATCA's platform. Standard (business-to-business) invoices are cleared by ZATCA before they are shared, and simplified invoices are reported to it.

What it means for your systems

Every system that issues an invoice has to do it in the required format: the point of sale at the counter, the ERP or accounting system for business-to-business invoices, and any online store. Invoices typed in a word processor, or from a system that cannot connect to ZATCA, are a problem in the integration phase.

If invoices come from more than one system, each needs to comply, or the invoicing needs to move into one system that does.

Preparing

  • List every place an invoice is produced today.
  • Check whether ZATCA has notified your business of its integration wave, and the date.
  • Ask each system's supplier which phase it supports and how it is updated as ZATCA's specifications change.
  • Where a system cannot comply, plan the move with a data migration and a reconciliation, before the deadline rather than on it.

Check your own obligations

This is a summary, not tax advice. ZATCA publishes the rules, the technical specifications and each business's wave on its own site, zatca.gov.sa, and that is the authority for your obligations.

Questions businesses ask

  • What is ZATCA e-invoicing?

    The requirement, introduced by the Zakat, Tax and Customs Authority in December 2021, for VAT-registered businesses in Saudi Arabia to issue invoices electronically from compliant systems, known as Fatoora.

  • What is the difference between phase 1 and phase 2?

    Phase 1 (generation) requires invoices to be created and stored electronically, with a QR code on simplified invoices. Phase 2 (integration), applied in waves from January 2023, connects the invoicing system to ZATCA's platform.

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