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