ZATCA E-Invoicing in Saudi Arabia: Wave 24, Phase 2 Requirements, and How Odoo Helps You Comply

ZATCA E-Invoicing in Saudi Arabia: Where Things Stand in 2026

For the broader picture on e-invoicing across regions, see our guide to e-invoicing and tax compliance in Odoo. If your business operates in Saudi Arabia, ZATCA e-invoicing (known as Fatoora) is no longer something you can plan for “eventually.” The Zakat, Tax and Customs Authority has been steadily expanding the mandate since 2021, and by 2026 it covers the vast majority of VAT-registered businesses in the Kingdom, including many small and mid-sized companies that were previously out of scope. Understanding exactly where the mandate stands, and how Odoo fits into compliance, is essential for any business operating in KSA right now.

A Quick Recap: The Two Phases of Fatoora

Phase 1 (Generation Phase) took effect on 4 December 2021. It required all VAT-registered businesses to stop using manual or paper invoices and instead generate, store, and manage compliant e-invoices with QR codes and required data fields using an approved electronic system.

Phase 2 (Integration Phase) began on 1 January 2023 and is being rolled out in waves based on business turnover. This is the more demanding phase: businesses must directly integrate their invoicing systems with ZATCA’s Fatoora platform, transmitting invoices in real time for clearance (B2B/B2G) or reporting (B2C) rather than simply generating compliant invoices locally.

Where the Wave Rollout Stands in 2026

ZATCA has been lowering the turnover threshold wave by wave, bringing progressively smaller businesses into scope:

• Wave 23 — businesses with taxable turnover above SAR 750,000 (in 2022, 2023, or 2024) were required to complete Fatoora integration by 31 March 2026.
• Wave 24 — the threshold dropped to SAR 375,000, the lowest yet, bringing thousands of additional SMEs into mandatory Phase 2 compliance by 30 June 2026.

Notably, ZATCA’s “Initiative to Cancel Fines and Exempt Taxpayers from Penalties” — which allowed businesses to correct past errors without financial penalty — was extended through 30 June 2026 alongside Wave 24. After that date, enforcement is expected to tighten, so businesses still catching up should treat this as a closing window rather than an open-ended grace period. ZATCA typically notifies each wave’s targeted taxpayers at least six months ahead of their integration deadline, and further waves are expected to continue extending the mandate toward full nationwide coverage.

What Phase 2 Integration Actually Requires

Complying with Phase 2 isn’t just a matter of turning on a setting. Businesses need systems capable of:

• Generating structured XML invoices in UBL 2.1 format (or PDF/A-3 with embedded XML) — unstructured formats like plain PDFs, images, or word-processor documents do not qualify.
• Applying a cryptographic stamp and digital signature to every standard invoice, along with a unique UUID and QR code.
• Real-time clearance for B2B/B2G invoices, where invoices must be validated by ZATCA’s platform before being considered legally issued.
• Reporting B2C invoices to ZATCA within the required reporting window after issuance.

Meeting these requirements with spreadsheets, manual QR code generators, or disconnected invoicing tools becomes unmanageable quickly, especially as transaction volume grows.

How Odoo Supports ZATCA Compliance

Odoo’s Saudi Arabia localization module is built to handle Fatoora requirements natively within the accounting workflow, rather than requiring a separate bolt-on compliance tool. In practice, this means:

• Invoices generated in Odoo can be automatically formatted to meet UBL/XML structural requirements.
• Cryptographic stamps, digital signatures, and QR codes are generated as part of the standard invoicing flow, not a manual extra step.
• Integration with the Fatoora platform for real-time clearance and reporting is handled through Odoo’s compliance connectors, reducing the risk of manual transmission errors.
• As ZATCA updates its technical specifications (as it did with its third version of e-invoicing controls in May 2026), localization updates can be applied without rebuilding your entire invoicing process from scratch.

For businesses newly entering scope under Wave 24, this native approach is particularly valuable — many SMEs affected by the lowered threshold have never had to think about structured e-invoicing before, and building compliance directly into the ERP they already use avoids adding an entirely new system to learn and maintain.

Practical Steps for Saudi Businesses Right Now

• Check your revenue against the current thresholds. If your taxable turnover exceeded SAR 375,000 in 2022, 2023, or 2024, you are likely already in scope under Wave 24.
• Confirm your invoicing system produces compliant XML — not just a QR code on a PDF, but a properly structured, digitally signed invoice.
• Clean up your customer data — accurate VAT numbers and addresses are required for compliant invoices, and this is often the most time-consuming part of preparation.
• Test your integration before your deadline, using ZATCA’s sandbox environment where available, rather than waiting until the compliance date to discover issues.
• Watch for future wave announcements — if you’re currently below the threshold, ZATCA’s pattern suggests further waves will continue lowering it over time.

The Bottom Line

ZATCA’s e-invoicing mandate has moved well past the “early adopter” stage — by mid-2026, it covers the large majority of VAT-registered businesses in Saudi Arabia, with the penalty-waiver window closing alongside the Wave 24 deadline. For businesses still relying on manual invoicing or disconnected compliance tools, integrating e-invoicing directly into an ERP like Odoo isn’t just about avoiding fines — it’s about building a finance function that can keep up as ZATCA continues expanding and refining the mandate.

If you’re unsure whether your business is currently in scope, or whether your invoicing system meets Phase 2 technical requirements, working with an experienced Odoo implementation partner can help you assess your compliance gap and get integrated before enforcement tightens further. Also see our guide to Odoo ERP implementation services if you’re planning a new deployment.