How small businesses must prepare for Wave 25 integration
Business owners and finance teams should take the following steps to ensure compliance before February 2027:
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Step 1: Audit accounting software compatibility
Ensure your point-of-sale (POS) or ERP system is listed among ZATCA's accredited qualifying solution providers supporting Phase 2 API integration.
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Step 2: Generate Cryptographic Stamp Identifier (CSID)
Log into the Fatoora portal using your ZATCA credentials, register your solution unit, and generate the production cryptographic stamp.
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Step 3: Test end-to-end invoice transmission in Sandbox
Run simulated test batches for both standard tax invoices and simplified consumer receipts to verify that XML schemas and hash chains validate with zero errors.
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Step 4: Train billing personnel on real-time rejection protocols
Establish operational protocols for handling invoice rejections or offline fallback scenarios within statutory 24-hour reporting windows.
ZATCA Wave 25 announcement and scoping criteria
The Zakat, Tax and Customs Authority (ZATCA) announced the criteria for Wave 25 of the Integration Phase (Phase 2) of electronic invoicing (*Fatoorah*).
Wave 25 targets all resident taxpayers whose revenues subject to Value Added Tax (VAT) exceeded SAR 187,500 during any of the calendar years 2022, 2023, 2024, or 2025. This milestone marks the first time that 2025 financial performance has been incorporated into ZATCA’s scoping thresholds.
Mandatory integration deadline: 1 February 2027
Establishments falling within the Wave 25 revenue bracket must fully integrate their electronic invoicing solutions and accounting ERP software with ZATCA's Fatoora platform no later than 1 February 2027.
ZATCA provides a mandatory six-month notification window prior to enforcement, allowing small businesses, retail outlets, and service providers adequate time to test API endpoints and generate compliant cryptographic stamps.
Phase 1 (Generation) vs Phase 2 (Integration): what changes?
While Phase 1 focused simply on generating structured invoices electronically and banning cash register slips, Phase 2 establishes strict machine-to-machine validation:
1. B2B Tax Invoices (Standard): Must be transmitted in real time to the Fatoora portal. ZATCA clears the invoice and returns a digital signature before the seller can legally transmit it to the buyer.
2. B2C Simplified Invoices: Must include an encrypted cryptographic stamp and ZATCA-compliant QR code, and must be reported electronically to the Fatoora database within 24 hours of issuance.
3. Prohibited Features: Invoicing software must block manual invoice sequence manipulation, multiple sequence numbering, or unlogged invoice edits.
Tax penalties for missing the integration cutoff
Failing to integrate with the Fatoora platform by 1 February 2027 triggers progressive financial penalties under the VAT Executive Regulations.
Violations can result in initial warning fines starting at SAR 1,000, escalating to 5% of unpaid tax liabilities and potential suspension of commercial registration services.