Short answer: ZATCA has announced Wave 25 of Phase 2 (integration) of Saudi e-invoicing. If your VAT-taxable revenue exceeded SAR 187,500 in any of 2022, 2023, 2024 or 2025, your business must integrate its invoicing system with the Fatoora platform starting 1 February 2027. The threshold is half of Wave 24's SAR 375,000, which brings in thousands of small shops, pharmacies, contractors and service businesses that have never had to connect their systems before.

This article explains how to check whether you are included, what "integration" really requires, and the decisions you need to make now about your accounting or ERP system.

Am I included in Wave 25?

You are included if all of the following are true:

•           You are registered for VAT in Saudi Arabia.

•           Your revenue subject to VAT was above SAR 187,500 in at least one of the years 2022, 2023, 2024 or 2025.

•           You were not already included in an earlier wave.

Note the wording: it is any one of those years. A business whose revenue has since dropped is still included if one year crossed the threshold. ZATCA notifies targeted taxpayers in advance, but do not wait for the message; check your VAT returns now.

What Phase 1 vs Phase 2 means

In plain terms: in Phase 2, ZATCA sees your invoices as they happen, and a B2B invoice is not valid until ZATCA accepts it.

What your system must do

•           Onboard each invoicing unit (each branch, POS or system issuing invoices) with ZATCA through the Fatoora portal, using a one-time code to obtain a cryptographic stamp identifier (CSID).

•           Generate the XML invoice with all mandatory fields, the QR code, a unique ID and a hash linking it to the previous invoice.

•           Send tax invoices for clearance and wait for ZATCA's response before giving the invoice to the customer.

•           Report simplified invoices (retail, pharmacy, restaurant receipts) within 24 hours, including when the POS was offline.

•           Handle rejections: show the error to your team, let them correct the data, and resend.

•           Store invoices and their ZATCA responses for audit.

The three most common problems we see

1. A system that was "Phase 1 compliant" but cannot integrate

Many local programs added a QR code in 2021 and stopped there. Phase 2 is a different level of technical work. Ask your vendor for proof of a live Phase 2 integration, not a promise.

2. Dirty customer data

B2B clearance needs the buyer's VAT number and a structured national address. Customer records typed casually over years will be rejected. Start cleaning now.

3. POS and branches forgotten

Companies often prepare head-office invoicing and forget that every branch POS issues simplified invoices that must also be reported. Each one needs to be onboarded and tested.

From our projects in Saudi Arabia: We have a retail in Riyadh region with 18 branches across the cities, with total number of 36 POS sessions at a time, each POS provides simplified invoice.

How ZATCA Phase 2 works in Odoo

Odoo already has the building blocks: VAT-registered customers and products, Saudi tax configuration and a complete invoicing flow from sales and POS. Integration adds:

•           Saudi localisation: chart of accounts, VAT taxes and Arabic/English invoice layouts.

•           A ZATCA connector: in Odoo Enterprise there is an official Saudi e-invoicing module; in Odoo Community the integration is delivered through a dedicated module that a partner configures or builds. In both cases each invoice shows its ZATCA status (cleared, reported or rejected) directly on the document.

•           POS reporting: simplified invoices from Odoo POS are queued and reported automatically, including those created while offline.

•           Validation rules: required VAT numbers and addresses for B2B customers, so rejected invoices become rare.

A realistic timeline to 1 February 2027

1.         Now to November: confirm inclusion, decide whether your current system can do Phase 2, and choose your path (upgrade, replace or integrate).

2.         November to December: clean customer and product data; set up and configure the system.

3.         January: onboard every invoicing unit in ZATCA's simulation environment and test real scenarios: credit notes, advance payments, discounts, offline POS.

4.         From 1 February: go live and monitor rejections daily for the first weeks.

Frequently asked questions

What happens if I miss the deadline?

ZATCA applies a staged approach of warnings followed by financial penalties for violations. Beyond the penalties, B2B customers that are themselves integrated will increasingly refuse invoices that are not cleared.

Does Phase 2 apply to simplified (B2C) invoices too?

Yes. They are reported within 24 hours rather than cleared in advance, but they still have to go to ZATCA.

Can I use one system for Saudi Arabia and Egypt?

Yes, if it is a proper ERP. A multi-company Odoo setup can run ZATCA integration for the Saudi company and ETA e-invoicing for the Egyptian company in the same database.

Do I need to change my ERP?

Not necessarily. If your current system has a proven Phase 2 integration and handles your branches and POS, keep it. If it does not, February is a hard deadline for finding out.

Get ready for Wave 25 with ExtraMile

ExtraMile implements Odoo for Saudi businesses from our Jeddah office, including retail, pharmacies, contractors and distributors. We will check whether your current setup can meet Phase 2 and give you a clear plan to 1 February.

Request a ZATCA Phase 2 readiness check or message us on WhatsApp: Saudi Arabia

Source: ZATCA announcement on the criteria for Group 25 of the integration phase (Saudi Press Agency, July 2026). Correct as of October 2026; confirm your obligations with ZATCA or your tax advisor.

This article was drafted with AI assistance and reviewed and edited by the ExtraMile implementation team.