Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA) has published the selection criteria for Wave 25 of the Integration Phase of its e-invoicing programme, setting the threshold at SAR 187,500 in VAT-subject revenue — half the SAR 375,000 that defined Wave 24. Taxpayers who crossed that figure in any of 2022, 2023, 2024 or 2025 must integrate their invoicing systems with the Fatoora platform by 1 February 2027.
The criteria were announced on 24 July 2026, and follow-up guidance on readiness continued into early August. It is the lowest threshold the programme has set since Phase 2 began.
Key Highlights
- Threshold: SAR 187,500 in VAT-subject revenue, down from SAR 375,000 in Wave 24
- Look-back window: revenue in any of the years 2022, 2023, 2024 or 2025 puts a taxpayer in scope
- Integration deadline: 1 February 2027 with the Fatoora platform
- Notification: ZATCA will notify targeted taxpayers directly, and has committed to at least six months' notice for subsequent waves
Details
The look-back rule is the part most easily missed. Scope is determined by revenue in any single year from 2022 through 2025 — not by current turnover. A business that had one strong year in 2022 and has since shrunk is still in Wave 25. That detail pulls a long tail of small cafés, boutiques, freelancers and service providers into the clearance model for the first time.
Phase 2 requirements themselves are unchanged from earlier waves. In-scope businesses must issue invoices in the approved UBL 2.1 XML format, apply a cryptographic stamp and digital signature, generate a UUID per invoice, embed a QR code, and connect over a secure API — real-time clearance for B2B invoices, and reporting within 24 hours for B2C simplified invoices. ZATCA describes the Integration Phase as requiring "additional functionality" beyond Phase 1, including platform integration, standardised formatting and expanded data fields.
The authority framed the rollout as part of the Kingdom's "economic development and digital transformation," crediting Phase 1 with raising the level of consumer protection.
Impact
Each successive wave has moved further down the size curve, and Wave 25 is where the programme reaches businesses that mostly do not have an IT function. Analysis by VATupdate notes that with over 1.7 million active commercial registrations in the Kingdom, Wave 25 is the broadest compliance push in Fatoora's history.
For companies in scope, the practical problem is rarely the invoice format. It is that invoice data lives in more than one place — a point-of-sale system, a spreadsheet, an accounting package, sometimes a WhatsApp thread — and clearance requires a single authoritative stream. Wave 24, whose deadline passed on 30 June 2026, produced a recurring pattern of teams discovering the gap weeks before the cutoff rather than months.
The eighteen-month runway to February 2027 is generous by the programme's standards. It is also the last comfortable window: waves have consistently arrived faster than the businesses they target have replaced their systems.
Background
Saudi Arabia's e-invoicing mandate began with Phase 1 (Generation) in December 2021, requiring compliant electronic invoices with QR codes. Phase 2 (Integration) started in January 2023 with the largest taxpayers and has rolled out in waves ever since, each one lowering the revenue threshold. Wave 24, covering businesses above SAR 375,000, had an integration deadline of 30 June 2026.
What's Next
Targeted taxpayers will receive direct notification from ZATCA. Businesses that believe they may be in scope should not wait for it — the six-month notice commitment applies to future waves, and Wave 25 candidates can already check their own 2022 through 2025 VAT filings against the threshold today.
If your invoicing data is spread across systems that do not talk to each other, the integration work is the long pole, not the compliance paperwork. We have written about that gap in The ERP Trap: why a new ERP will not fix your data, and the practical requirements are covered in our ZATCA e-invoicing guide. Teams running Odoo will recognise most of the failure modes in our Wave 24 field notes.
If you want a second opinion on whether your current stack can clear invoices on time, talk to us — a readiness review is a short conversation, not a project.
Source: ZATCA