If your business crossed SAR 187,500 in VAT-subject revenue in any of 2022, 2023, 2024, or 2025, ZATCA has just put you on the clock. On 24 July 2026, the Zakat, Tax and Customs Authority announced Wave 25 of the e-invoicing Integration Phase — and it cuts the qualifying revenue threshold in half compared to the wave before it. Businesses that were comfortably below the line for Wave 24 are, in many cases, now squarely inside it.
This is not a new tax. It is a new deadline for connecting your invoicing system directly to ZATCA’s Fatoora platform — and the wave-by-wave rollout means the businesses being pulled in are getting smaller with every announcement.
What Wave 25 Actually Changes
Saudi e-invoicing rolls out in two phases. Phase 1 required every VAT-registered business to generate structured electronic invoices from December 2021 onward — a self-contained requirement with no ZATCA connection involved. Phase 2, the Integration Phase, is different: it requires your invoicing system to connect directly to ZATCA’s Fatoora platform for real-time clearance and reporting. Because integrating every VAT-registered business at once was never realistic, ZATCA phases it in through sequential “waves,” each one lowering the revenue threshold and pulling in a new band of smaller businesses.
Wave 24 set the bar at SAR 375,000 in VAT-subject revenue, with a compliance deadline of 30 June 2026. Wave 25 halves that figure to SAR 187,500 — and the integration deadline for this wave is 1 February 2027. If your VAT-subject revenue exceeded SAR 187,500 in any single one of the last four full years (2022 through 2025), you are in scope, even if your revenue has since dropped below that figure.
ZATCA’s test looks backward across four years, not just your most recent one. A business that had one strong year in 2023 and has since scaled down is still caught if that single year crossed SAR 187,500. Don’t assess eligibility off your current-year figures alone — check all four years.
A Worked Example
A Riyadh-based marketing agency reports the following VAT-subject revenue: SAR 160,000 in 2022, SAR 210,000 in 2023, SAR 195,000 in 2024, and SAR 175,000 in 2025. Current-year revenue alone would suggest the agency sits comfortably under the SAR 187,500 line. But because 2023 and 2024 both exceeded it, the agency falls inside Wave 25 — and has until 1 February 2027 to integrate.
This is precisely the kind of business that assumed Phase 2 integration was a large-company problem. It no longer is.
What “Integration” Actually Requires
Unlike Phase 1, which only demanded structured invoice generation, Phase 2 integration is a technical connection to ZATCA’s systems. A compliant e-invoicing solution (EGS) must be able to:
- Generate invoices in the approved UBL 2.1 XML format
- Apply a cryptographic stamp and digital signature to every invoice
- Generate a unique universal identifier (UUID) for each invoice
- Embed a compliant QR code on the invoice
- Connect to ZATCA via a secure API for real-time clearance of B2B invoices, and reporting of B2C simplified invoices within 24 hours
Most small and mid-sized businesses newly caught by Wave 25 do not build this in-house — they license a ZATCA-accredited e-invoicing solution and connect their existing accounting or POS system to it. The practical lead time is in vendor selection, testing the API connection, and onboarding staff to the new invoice-clearance workflow, not in the software cost itself.
What Happens If You Miss the Deadline
ZATCA applies a progressive penalty structure to Phase 2 non-compliance rather than a single fixed fine. Minor or first-time issues — such as a formatting defect — typically start with a warning, escalating to fines in the SAR 1,000–10,000 range for repeat violations within a 12-month period. Full failure to integrate, or failure to retain e-invoices in the required format, can reach SAR 50,000. Deleting or amending a cleared e-invoice outside the permitted process carries its own separate fine, starting around SAR 10,000.
The practical risk for a newly in-scope small business is less about a single large fine and more about the compounding effect: continuing to issue invoices the old way past your deadline creates a growing backlog of non-compliant invoices, each one a separate potential violation once ZATCA reviews your filings.
How to Prepare Before February 2027
The deadline feels distant, which is exactly why businesses in Wave 25 tend to under-prioritize it. In practice:
- Check all four years, not just this year’s revenue. Use 2022–2025 VAT-subject revenue, not turnover or gross sales, to test the SAR 187,500 threshold.
- Confirm your current accounting or POS system’s e-invoicing readiness. Many platforms already used in Saudi Arabia have a ZATCA-accredited integration path — check with your vendor before assuming you need to switch systems entirely.
- Budget for testing time, not just software. ZATCA’s onboarding involves a sandbox connection and validation period before you can clear live invoices — this takes weeks, not days.
- Don’t wait for a Wave 26 announcement to assume you’re safe. If your revenue history already clears SAR 187,500, you are in scope regardless of any future wave.
Frequently Asked Questions
Wave 25 is the latest phase of ZATCA’s e-invoicing Integration Phase (Phase 2) rollout, announced 24 July 2026. It requires businesses whose VAT-subject revenue exceeded SAR 187,500 in any of 2022, 2023, 2024, or 2025 to integrate their e-invoicing systems with ZATCA’s Fatoora platform by 1 February 2027.
Wave 24 set the revenue threshold at SAR 375,000 with a 30 June 2026 deadline. Wave 25 halves that threshold to SAR 187,500, with a later deadline of 1 February 2027 — pulling in a much larger group of smaller businesses.
ZATCA looks at your VAT-subject revenue in each of 2022, 2023, 2024, and 2025 individually. If revenue in even one of those years exceeded SAR 187,500, your business is in scope for Wave 25 — your most recent year’s revenue alone does not determine eligibility.
A compliant e-invoicing solution that generates invoices in UBL 2.1 XML format, applies a cryptographic stamp and digital signature, assigns a UUID to each invoice, embeds a QR code, and connects to ZATCA via API for real-time B2B clearance and 24-hour B2C reporting.
ZATCA applies escalating penalties for Phase 2 non-compliance, starting with warnings for minor issues and rising to fines up to SAR 50,000 for full integration failure or improper invoice retention. The longer non-compliance continues, the larger the backlog of potentially non-compliant invoices.
No. Eligibility is based on your own revenue history against the published threshold, not an individual notification. If your VAT-subject revenue exceeded SAR 187,500 in any of the four qualifying years, you should assume you are in scope and begin preparing.
- Wave 25, announced 24 July 2026, sets the Phase 2 integration threshold at SAR 187,500 in VAT-subject revenue, with a compliance deadline of 1 February 2027.
- Eligibility is tested against any single year from 2022 to 2025 — a past strong year can still bring you into scope even if current revenue is lower.
- Integration requires a ZATCA-accredited e-invoicing solution capable of UBL 2.1 XML generation, cryptographic stamping, UUIDs, QR codes, and API-based clearance/reporting.
- Non-compliance penalties are progressive, from warnings up to SAR 50,000 for full integration failure.
- The February 2027 deadline allows lead time — use it for vendor selection and sandbox testing, not to defer the decision.
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This article is based on ZATCA’s Wave 25 announcement of 24 July 2026 and publicly reported Phase 2 integration requirements and penalty structures. Wave criteria and deadlines are set by ZATCA and may be updated; confirm your specific obligations directly with ZATCA or a licensed advisor before relying on this article for compliance planning. dariba.co is an independent platform with no consulting relationships.