In brief
Clearance is a legal prerequisite for Tax Invoices — it must happen before the invoice leaves your system. An uncleared Tax Invoice is not a valid VAT document, regardless of content accuracy.
The Core Distinction
Clearance applies to Tax Invoices (B2B): ZATCA must validate and stamp the invoice before it can legally be shared with the buyer. Reporting applies to Simplified Tax Invoices (B2C): the invoice is shared with the customer immediately after generation, then transmitted to FATOORA within 24 hours.
| Feature | Clearance (Tax Invoice) | Reporting (Simplified Invoice) |
|---|---|---|
| When FATOORA is involved | Before sharing with buyer | After sharing with customer (within 24 hours) |
| Invoice validity without FATOORA response | Invalid — cannot be shared | Valid for customer immediately; reporting fulfils compliance |
| ZATCA stamp applied | By FATOORA after clearance — embedded in returned XML | By EGS (using CSID) before sharing |
| Submission format to FATOORA | XML only (not PDF/A-3) | XML only (not PDF/A-3) |
| Format shared with buyer | Cleared XML or PDF/A-3 with embedded cleared XML | Printed copy, electronic format, or any human-readable format |
| Credit/debit notes | Tax Invoice notes go through clearance | Simplified Invoice notes go through reporting |
Clearance — The Step-by-Step Process
Your EGS generates the invoice in XML (UBL 2.1), assigns a UUID, calculates and embeds the Previous Invoice Hash (SHA-256), applies your CSID-backed cryptographic stamp, and transmits the complete XML to FATOORA via API. FATOORA runs multi-layer validation. If it passes, FATOORA applies ZATCA’s own cryptographic stamp, updates the QR code, and returns the cleared XML. You then deliver the cleared document to the buyer — as XML or as a PDF/A-3 with the cleared XML embedded.
Reporting — The 24-Hour Obligation
Your EGS generates the invoice, assigns a UUID, embeds the Previous Invoice Hash, and applies your cryptographic stamp. The invoice is immediately shared with the customer — printed, emailed, or in any human-readable format. Within 24 hours of the invoice’s generation timestamp, the XML must be submitted to FATOORA. FATOORA validates it and returns a confirmation. If validation fails, the submission must be corrected and resubmitted before the window closes.
Rejection Handling
| Response | Tax Invoice Action | Simplified Invoice Action |
|---|---|---|
| Accepted | Share cleared invoice with buyer | Reporting obligation fulfilled |
| Accepted with Warnings | Share cleared invoice; investigate warning for future invoices | Reporting fulfilled; investigate warning |
| Rejected | Do NOT modify original. Generate new corrected invoice with new UUID. Use rejected invoice hash as PIH in new invoice. | Correct data issue; resubmit before 24-hour window expires |
| No connectivity | Retry every 5 min; share uncleared invoice temporarily if no response after ~5 min; retry every 15 min | Queue for retry; 24-hour window still runs |
What FATOORA Validates
| Validation Layer | What It Checks |
|---|---|
| XML schema conformance | Invoice structure matches UBL 2.1 as defined in ZATCA’s XML Implementation Standard |
| Mandatory field presence | All mandatory fields for the invoice type and phase are populated |
| VAT calculation accuracy | VAT amounts at line and document level are mathematically consistent |
| Cryptographic stamp validity | EGS-applied stamp verifiable against the registered CSID |
| UUID uniqueness | UUID has not been used in a previously submitted invoice |
| Invoice counter sequence | Counter value is consistent with the sequence of prior invoices from that EGS unit |
| Previous Invoice Hash | PIH matches the hash of the last accepted invoice from that EGS unit |
| Seller VAT registration | Seller VAT number matches the registered taxpayer profile |
When ZATCA’s Systems Are Unavailable
Tax Invoice during FATOORA outage
Retry clearance every five minutes. After approximately five minutes of failed attempts, you may share the uncleared invoice with the buyer as a temporary measure — ZATCA acknowledges the operational reality. Continue retrying every 15 minutes. Once clearance succeeds, provide the buyer with the cleared version. Retain detailed logs of all retry attempts and timestamps.
Simplified Tax Invoice during FATOORA outage
Share the invoice with the customer immediately as normal. The 24-hour reporting window continues running — it does not pause for FATOORA outages. Queue the invoice for submission and retry automatically until the report is accepted. Log all retry attempts as evidence if the deadline is missed due to a prolonged outage.
Key takeaways
- Clearance is a legal prerequisite for Tax Invoices — it must happen before the invoice leaves your system. An uncleared Tax Invoice is not a valid VAT document, regardless of content accuracy.
- The 24-hour reporting window for Simplified Tax Invoices is absolute — it does not reset at midnight, pause for weekends, or extend during outages. Automated reporting with fault-tolerant retry logic is the only reliable solution at any transaction volume.
- Rejected invoices retain their identity in the hash chain. Do not modify or drop a rejected Tax Invoice — it must remain in your system, and its hash must appear as the PIH in the next invoice you generate.
- Clearance confirms technical compliance — not correct VAT treatment. ZATCA can still audit the substantive tax position of any cleared invoice.
- Keep detailed logs of all clearance attempts, responses, and retries. Evidence of good-faith compliance during a FATOORA outage substantially changes how a missed window or temporary uncleared invoice is assessed.
Frequently asked questions
Can I share a Tax Invoice before clearance if the buyer needs it urgently?
Not under normal circumstances. Clearance is a legal prerequisite — an uncleared Tax Invoice is not a valid VAT document. Only in the event of a FATOORA outage may you share an uncleared invoice temporarily, following the outage protocol. Do not make this a routine practice.
Does FATOORA clearing an invoice mean the VAT treatment is correct?
No. Clearance confirms technical compliance with format, structure, and field requirements. It does not constitute ZATCA's approval of the VAT treatment. If you applied the wrong VAT rate or misclassified the supply, clearance will not catch that error. ZATCA may still audit the substantive tax position of a cleared invoice.
What if I miss the 24-hour reporting window?
A missed window is a compliance violation. The invoice should still be reported — a late submission is better than none. ZATCA's penalty framework applies. The waiver initiative (open until 30 June 2026) may cover historical missed windows, but it does not change the obligation going forward. Automated reporting with reliable retry logic is the only protection against systematic window misses.
What if a clearance rejection means I cannot deliver goods on time?
This is an operational risk that Phase 2 introduces and that businesses must plan for. Build clearance into your order-to-delivery workflow with enough lead time that a single rejection and resubmission does not delay the shipment. Systems that generate and submit for clearance early in the transaction cycle — not at the moment of dispatch — are operationally more resilient.
Sources
This article reflects ZATCA's E-Invoicing Regulation (December 2020) and the Controls, Requirements, Technical Specifications and Procedural Rules Resolution (May 2023). For informational purposes only — not legal or tax advice. Confirm with zatca.gov.sa or a qualified Saudi tax advisor. dariba.co is an independent platform.
