Saudi Arabia E-Invoicing (FATOORAH) 2025: Full Compliance Guide for VAT-Registered Businesses

Saudi Arabia continues to lead the Middle East in e-invoicing modernization with its FATOORAH system—a mandatory Continuous Transaction Control (CTC) model overseen by the Zakat, Tax and Customs Authority (ZATCA). The initiative is designed to bring real-time tax visibility, reduce fraud, and digitize VAT compliance across all business sectors.

As of now, all VAT-registered businesses in Saudi Arabia are subject to the mandate, covering B2B, B2C, and B2G transactions.

Two-Phase Rollout of FATOORAH

Saudi Arabia’s e-invoicing reform is structured in two major phases:

Phase 1: Generation Phase

Effective since December 4, 2021, this phase required all VAT-registered entities to:

• Generate structured e-invoices;

• Store invoices digitally;

• Include key data fields such as VAT registration numbers, timestamps, and invoice types;

• Add QR codes to B2C invoices for consumer verification.

Phase 2: Integration Phase

Launched in January 2023 and implemented in waves based on taxpayer turnover, this phase requires businesses to:

• Integrate their systems with ZATCA’s centralized platform;

• Submit invoices for real-time clearance or reporting;

• Use software that applies a cryptographic stamp to validate each invoice before issuance;

• Allow ZATCA to store all submitted invoices in its centralized repository.

Required Invoice Formats

ZATCA mandates specific technical standards for invoice generation:

• XML format (UBL 2.1), per the FATOORAH specification;

• PDF/A-3 with embedded XML, enabling both machine-readability and human-readability.

Document Types in Scope

The e-invoicing rules apply to the following documents:

• Tax Invoices: Required for B2B transactions, must include detailed VAT information.

• Simplified Invoices: Used for B2C, with simplified VAT elements.

• Credit and Debit Notes: Fully subject to the same structured format and validation process.

Timeline at a Glance

• December 2021: Phase 1 (Generation) goes live.

• January 2023: Phase 2 (Integration) begins rolling out in waves.

• 2024–2025: Expected full Phase 2 coverage for all VAT-registered taxpayers.

Saudi Arabia’s Specific Compliance Requirements

To be compliant under the FATOORAH system, all e-invoices must include:

• VAT Registration Numbers of both supplier and buyer;

• Universally Unique Identifier (UUID) for each invoice;

• Cryptographic stamp (required under Phase 2);

• QR Code (mandatory for B2C invoices);

• Use of ZATCA-approved e-invoicing software;

• Digital archiving for at least 6 years.

Strategic Benefits for Businesses

Saudi Arabia’s real-time e-invoicing framework offers several key advantages:

• Instant tax compliance reduces fraud risk and audit exposure;

• Faster invoice processing enhances cash flow and transparency;

• Alignment with international standards like UBL 2.1 facilitates smoother cross-border transactions;

• Regulatory predictability supports digital finance transformation across industries.

Official Resources

• 🔗 ZATCA E-Invoicing Portal