Webinar: e-invoicing different stages in Saudi Arabia 2025 and how your organization can prepare for compliance

The shift to e-invoicing in Saudi Arabia is more than a regulatory requirement—it’s a transformation of how businesses manage compliance, accuracy, and financial reporting. With ZATCA mandating phased e-invoicing implementation, companies can no longer rely on Excel sheets or Word documents for invoicing. Instead, they need structured, validated systems that connect directly with the authority. This transition raises practical questions for many SMEs, like how can we set up e-invoicing correctly?, what mistakes should we avoid? And how can we ensure our business is compliant without unnecessary complexity?

In this article, we’ll walk through the Saudi e-invoicing requirements, explain why financial professionals—not just IT teams—play a critical role in the process, and share a step-by-step guide to setting up the e-invoicing module in Wafeq. Drawing on expert insights from the webinar, Ms. Rehab Saleh Al-Riyai, CEO of Ethbat Accounting Services Company, and Ms. Rima Daoud, Director of Partnership Success at Wafeq. You’ll also learn about the most common mistakes SMEs make, best practices for compliance, and how Wafeq makes the journey seamless.

Topic 1: E-Invoicing in Saudi Arabia: The different stages

Question 1: What is the first stage? And what changed in the second stage?

E-invoicing in Saudi Arabia was introduced by the Zakat, Tax, and Customs Authority (ZATCA) to improve transparency, combat tax evasion, and modernize financial reporting across all sectors. The initiative is being rolled out in two main phases:

• Phase One (Generation and Storage): Businesses must issue and store invoices electronically in a structured format instead of paper or unstructured files like Word or Excel.
• Phase Two (Integration and Connectivity): Companies must connect their systems directly with ZATCA’s Fatoora platform, ensuring every invoice is validated in real time.

This transformation requires companies not only to adopt compliant software but also to adapt their internal financial processes. As Ms. Rehab Saleh Al-Riyai noted during the webinar:

The system is not just about issuing a digital invoice; it’s about ensuring accuracy, structure, and compliance with ZATCA requirements from the very first entry.

For many SMEs, the challenge is balancing day-to-day operations with the technical demands of compliance. Ms. Rima Daoud highlighted this point, saying:

Businesses often underestimate the shift. E-invoicing is not simply digitization—it’s integration with the authority. That requires preparation, training, and the right system in place.

Watch the full webinar through this video:

Question 2: What to Expect in the Coming Period?

E-invoicing in Saudi Arabia will see more groups of taxpayers moving into the integration phase with ZATCA. Now the Authority has started identifying groups of taxpayers, and every period they announce a new segment. For example, we saw earlier thresholds like 500 million, then 250 million, then 40 million, and today we are talking about the 30 million SAR and above segment. This means that companies with revenues exceeding this figure must be ready for integration by the date specified by ZATCA.

Ms. Rehab Saleh Al-Riyai added that even if a company is not yet part of the announced segments, it’s better to start preparing now, because the requirements are the same. Those who prepare early will save themselves from last-minute pressure.

Read Also: Preparing for Saudi Arabia’s New E-Invoicing Groups.

Topic 2: How to prepare your organization to connect with the Zakat, Tax, and Customs Authority

Technical Requirements

ZATCA has set several technical requirements that companies must comply with to integrate into the e-invoicing system. The most important include:

• Having a qualified accounting system that complies with ZATCA specifications and connects directly with both phases of e-invoicing.
• A stable internet connection is required to transmit invoices in real time.

Documents and Data Required

Setting up the e-invoicing module in Wafeq requires preparing accurate documents and data to ensure smooth integration and compliance with ZATCA regulations. Key items include:

• Company Information: Legal entity details, VAT registration, and contact information.
• Customer Data: Accurate customer names, VAT numbers, and contact details.
• Sales Data: All sales transactions must be accurately recorded, including invoices, payment status, and product/service details. Missing or incorrect sales information can lead to rejected invoices during validation.
• Product/Service Catalog: Details of items or services sold, pricing, and VAT rates.

Topic 3: Common mistakes when implementing E-invoicing

Examples from the Saudi market and how to avoid notices and penalties

When companies in Saudi Arabia begin setting up the e-invoicing module, a few challenges often arise.. Recognizing these issues early helps avoid compliance risks and operational delays. The most common are:

• Technical Complexity of CSR (Certificate Signing Request) One of the most common obstacles clients face during e-invoicing setup is generating the CSR file, which requires technical understanding. Many accountants find this step complicated. Incorrect company data or mismatched details can cause ZATCA to reject the request. Wafeq’s guided CSR process reduces the risk of errors. Always double-check VAT numbers, company names, and Arabic-English spellings before uploading to ZATCA.
• Certificate Expiration and Renewal The Production Certificate issued by ZATCA has an expiry date. If not renewed on time, invoice clearance may be interrupted. Wafeq provides notifications before certificate expiry. Finance teams should assign responsibility for monitoring and acting on these reminders.
• Data Mismatch Between Invoices and ZATCA Requirements Invoice rejection can occur if required fields (like buyer VAT number or QR code) are missing or formatted incorrectly. Use Wafeq’s automated validation checks to ensure every invoice includes mandatory details. Conduct periodic internal reviews to maintain accuracy.
• Limited Testing Before Going Live Some businesses skip testing and move directly to production mode, which increases the risk of non-compliant invoices being issued. Always use Wafeq’s sandbox mode to simulate different scenarios before live deployment.
• Lack of Continuous Monitoring Compliance is not a one-time event. Businesses that fail to monitor ongoing invoice clearance risk penalties during audits. Wafeq’s compliance dashboard provides real-time visibility, and generating periodic reports helps identify issues early.

Setting Up the E-Invoicing Module in Wafeq

Implementing the e-invoicing module in Wafeq is a structured process that ensures your company remains fully compliant with ZATCA regulations while benefiting from automation and efficiency. Below is a practical walkthrough:

1. Access Your Company Settings Log in to your Wafeq account and navigate to your company settings. Under the "Compliance" or "E-Invoicing" tab, you will find the dedicated module for integration with ZATCA.
2. Register and Verify Your CSR (Certificate Signing Request) Wafeq provides a built-in flow to generate a CSR, which ZATCA requires for system registration. Download the CSR, upload it to ZATCA’s Fatoora portal, and obtain your Production Certificate.
3. Integrate the Production Certificate in Wafeq Once the certificate is issued, return to Wafeq and upload it to the e-invoicing settings. This establishes a secure connection with ZATCA’s clearance and reporting system.
4. Configure VAT and Invoice Settings Ensure your VAT number, company details, and invoice format comply with ZATCA’s Phase 2 requirements. Wafeq allows you to configure invoice headers, QR codes, and mandatory fields.
5. Test the Integration Before going live, use Wafeq’s sandbox mode to generate and send test invoices. This ensures that invoices are properly cleared or reported to ZATCA without errors.
6. Go Live and Monitor Compliance Once testing is successful, switch to production mode. Wafeq automatically ensures each issued invoice is validated, compliant, and securely transmitted to ZATCA. Regular compliance reports can also be generated for internal audits.

One of the main challenges companies face is handling the CSR request. Wafeq makes this part easier, but finance teams must still carefully verify the details. — Ms. Rima DaoudCommon Challenges during e-invoicing application and How to Overcome Them

How does the Wafeq program help you comply easily?

Wafeq’s e-invoicing module is designed not only to help companies comply with ZATCA regulations but also to streamline their accounting operations. By automating key steps, the system eliminates repetitive manual work, reduces errors, and gives finance teams confidence in their reporting.

• Guaranteed ZATCA Compliance – invoices are automatically generated and transmitted, aligning with Saudi regulations.
• Time Savings – reduces hours spent on manual submissions by automating repetitive tasks.
• Error Reduction – automation ensures accuracy and consistency in invoice data.
• Easy Reporting and Analytics – SMEs can track invoice status and payment updates, and generate financial reports effortlessly.
• Audit Readiness – secure, compliant records simplify ZATCA audits and reduce stress.
• Operational Efficiency – allows accountants to shift focus from data entry to analysis and strategic financial planning.

Ms. Rehab Saleh Al-Riyai, CEO of Ethbat Accounting Services Company, added: When clients know their invoices are being generated and transmitted through a compliant system, they feel secure.

Audience Questions and Answers

1. What amount can I deduct from customs clearance?

• If the VAT registration number is included in the customs declaration, the customs declaration will usually show a VAT amount of zero. In this case, the transaction is handled under the Reverse Charge Mechanism.
• If no VAT registration details are included, the company receives a normal tax invoice or pays VAT at customs. In this case, it is recorded as a purchase, and the paid VAT can be deducted.

2. The Ministry of Tourism requires adding the tourism license number to the invoice alongside the commercial registration and VAT number. Can this be done in Wafeq?

You can use the Additional Identifier field, which allows you to enter extra details such as the tourism license number and any other specific information required by the authority.

3. How can we connect invoices with the ZATCA without using accounting software?

This is not possible unless you have developed your own internal accounting system and then request ZATCA to review it and verify that all the technical requirements are met. The authority distinguishes between invoice types, such as Business-to-Business (B2B) invoices and Business-to-Consumer (B2C) invoices. Each type has its own technical requirements, including the file format that must be sent to the authority and the file format that should be generated for your own records. Therefore, the best and most reliable approach is to connect invoices through an approved accounting software and ensure that it is properly integrated and officially accredited by the Zakat, Tax, and Customs Authority (ZATCA).

4. My client uses the software, and I found that duplicate sales and purchase invoices have been recorded. What is the proper procedure to cancel these invoices? Is zeroing them out enough?

• For sales invoices: A credit note should be issued to cancel the invoice effect or record it as sales returns.
• For purchase invoices: A reversing entry can be made since the invoices are duplicated, but cannot be reversed as returns. In Wafeq, there is a direct cancellation button for sales invoices, which automatically generates a credit note to cancel the invoice’s effect properly.

5. How can I reconcile my tax return with the Zakat, Tax and Customs Authority (ZATCA)?

If we are dealing with a previously submitted return, it should already contain detailed information, such as which invoices are included in each line item, invoice dates, and the corresponding suppliers.

Using these details, you can compare them with the tax return data in Wafeq and check for:

• Invoices recorded in Wafeq but not included in the submitted return.
• Invoices included in the submitted return but missing in Wafeq.

Once these differences are clear, you can investigate further to confirm whether an invoice was entered incorrectly in the ZATCA return or an invoice was missing from Wafeq due to incomplete data. This process allows for a clear reconciliation and ensures alignment between Wafeq and the official tax return.

6. Do Small Businesses Need an Accountant?

Yes, in general, having an accountant and a marketer are essential elements for any business. However, in the case of small businesses, an external accountant may not be necessary if the owner, one of the partners, the manager, or another team member has sufficient accounting skills. These skills should include the ability to:

• Choose the right accounting software.
• Record financial data accurately.
• Classify financial transactions.
• Prepare complete financial reports. If these skills are available internally, the business may not need to hire an accountant.