Understanding ZATCA E-Invoicing Phase 2 Waves in Saudi Arabia

Updated On : Jan 22nd, 2025 | 23 min read

ZATCA (Zakat, Tax and Customs Authority) continues to roll out its E-Invoicing Phase 2 requirements in waves. Each wave targets businesses based on specific annual revenue thresholds and includes a grace period to help with the transition. In this blog, we'll break down the waves, clarify key dates, and highlight the latest updates and guidance from ZATCA.

What Are the ZATCA Phase 2 Waves?

Phase 2 of ZATCA’s E-Invoicing initiative involves integrating a taxpayer’s e-invoice system with the ZATCA Fatoora portal in a phased manner. Businesses are segmented based on their revenue, ensuring a smoother transition for everyone.

How Waves Are Determined

1. 1. Annual Taxable Revenues
2. Your company’s total taxable revenue in 2022 or 2023 determines which wave you fall under.
3. For the initial waves (Wave 1 & 2), the taxable revenue for 2021 was used.
4. For subsequent waves, 2022 or 2023 data is considered.
5. If your 2023 financials aren’t finalized, consult your tax advisor or finance department to ensure you close your books promptly.
6. 2. ZATCA Notifications
7. ZATCA sends out email notifications to let you know which wave you’re in.
8. Make sure the contact information ZATCA has on file is up to date (especially if the contact person has left your organization).
9. 3. Grace Period and Compliance Deadline
10. Each wave comes with a grace period to enable businesses to test and stabilize their e-invoicing processes.
11. ZATCA has shortened grace periods for subsequent waves; early waves had a 6-month grace period, while later waves may have as little as 1 month.
12. End Date: You must integrate by this date because, after this point, ZATCA begins officially recording your taxable amounts.

Latest Updates (as of 2025)

New Revenue Thresholds & Extended Deadlines

1. Additional Waves Announced: As of 2025 , ZATCA has announced more waves that cover small and medium enterprises. For instance, companies with revenues above SAR 1.75 million are now entering new waves by 30th September 2025.
2. Penalties for Non-Compliance: While ZATCA showed leniency for the initial waves, they have issued recent press releases emphasizing stricter penalties for missing deadlines in later waves. These fines can include monetary penalties based on the extent of non-compliance.

Clarification on Grace Period Usage

1. No ‘Free Pass’: ZATCA reiterates in their 2024 press release that the grace period is not a time to delay implementation but rather to test and stabilize. Businesses still need to integrate as soon as possible.
2. Shorter Grace for New Waves: Newer waves announced for 2025 have shorter grace periods, sometimes as little as one month.

Example of Compliance Timelines

If your wave’s official deadline is January 31, 2025:

1. Before February 1, 2025: You operate under Phase 1 norms and file invoices manually.
2. From February 1, 2025, onwards: You must comply with ZATCA’s Phase 2 requirements, and all e-invoices must be automatically filed through a compliant system.

Missed Your Wave Deadline?

1. Immediate Action: If you’ve missed your wave’s deadline, start the integration process right away.
2. One-Time Leniency: Though ZATCA showed leniency for initial waves, they have warned of stricter enforcement for later waves. Past invoices may be submitted once you are integrated, but this is typically a one-time exception.

Best Practices for ZATCA Phase 2 Compliance

1. Identify Your Wave Early

1. Consult your finance and tax teams to confirm your annual taxable revenue.
2. Watch for ZATCA email notifications and verify your company’s contact details.

2. Plan & Implement

1. Begin your e-invoicing system setup well before the official start date to utilize the grace period effectively.
2. Engage a ZATCA-approved solution provider for swift integration and testing.

3. Train Your Staff

1. Ensure that your finance, accounting, and sales teams are well-trained on the new system.
2. Proper training reduces errors and speeds up your ability to comply with Phase 2 requirements.

4. Keep Up with ZATCA Updates

1. Regularly check the ZATCA website and official press releases for any changes in compliance deadlines or wave announcements.
2. Stay aware of potential penalty structures for late compliance.

Level Up Your E-Invoicing with Accqrate

Navigating ZATCA's Phase 2 can feel complex, but you don’t have to do it alone. Over 5,000 Saudi businesses trust Accqrate to generate more than 300 million compliant e-invoices every month. Our powerful e-invoicing API easily integrates with your ERP/POS, acting as a seamless gateway to the ZATCA Fatoora portal.

1. Proven Track Record: Our Phase 2 Wave 1 customers have already passed ZATCA audits with flying colors, thanks to Accqrate’s robust solutions.
2. Continuous Compliance: We monitor ZATCA updates and automatically adjust our systems so you remain compliant.
3. Stress-Free Integration: Our dedicated support ensures a painless transition to Phase 2, whether you’re a large enterprise or an SMB.

For a smart, seamless e-invoicing solution that’s fully equipped to handle ZATCA’s latest requirements, Accqrate is your go-to partner.

Conclusion

The transition to ZATCA E-Invoicing Phase 2 is a critical milestone for businesses in Saudi Arabia. Understanding your wave, managing the grace period effectively, and staying updated on the latest ZATCA announcements are key to avoiding penalties and ensuring a smooth process. By choosing a trusted partner like Accqrate, you can confidently navigate these requirements and future-proof your invoicing operations.

Ready to streamline your e-invoicing compliance?

Contact Accqrate today and make the switch to seamless, ZATCA-compliant e-invoicing!

Disclaimer:

This blog post provides general information based on ZATCA guidelines and updates available as of 2025. For personalized advice tailored to your specific business situation, consult your tax advisor or reach out directly to ZATCA.

About Accqrate

Accqrate is a Saudi-based e-invoicing and ERP solution provider offering comprehensive accounting, e-invoicing integrators, and a full-suite ERP system, including POS solutions. Recognized as one of the most cost-effective platforms in KSA, Accqrate ensures seamless integration with ZATCA’s Fatoora portal, making Phase 2 compliance straightforward. Powered by GenAI and GPT technologies, the platform enhances user experience with intelligent features that boost business efficiency and inter-department collaboration.

With scalability and flexibility at its core, Accqrate offers both cloud and on-premise solutions, encouraging businesses in KSA to embrace digital transformation. Trusted across MENA, European, and ASEAN markets, Accqrate is a global solution helping organizations achieve operational excellence.