What is the difference between ZATCA Phase 1 and Phase 2?

ZATCA e-invoicing is being implemented in two main phases. Phase 1, known as the Generation Phase, became mandatory on 4 December 2021. It requires taxpayers subject to the e-invoicing regulations to generate and store invoices and notes electronically using a compliant solution.

Phase 1 focuses primarily on ensuring that businesses stop using handwritten invoices, text-editing tools, or spreadsheets as their invoicing system. The electronic solution must generate invoices with the required information and meet ZATCA's basic technical requirements, including QR code requirements for simplified tax invoices.

Phase 2, known as the Integration Phase, started on 1 January 2023 and is being introduced gradually in waves. It adds more technical and business requirements. Businesses in each wave must integrate their e-invoicing solution with ZATCA's Fatoora platform, use the required invoice format, and include additional mandatory fields.

The important difference is that Phase 1 is primarily about generating and storing compliant invoices, while Phase 2 is about integrating the business's e-invoicing system with ZATCA and enabling electronic transmission and validation through the required framework.

Key points

• Phase 1: Generation and storage of compliant e-invoices.
• Phase 1 became mandatory on 4 December 2021.
• Phase 2: Integration with ZATCA's Fatoora platform.
• Phase 2 started on 1 January 2023 and is implemented in waves.
• Phase 2 introduces additional technical, security, and invoice-format requirements.