What is ZATCA Phase 2?
ZATCA (Zakat, Tax and Customs Authority) Phase 2, also known as the Integration Phase, requires all VAT-registered businesses in Saudi Arabia to integrate their e-invoicing systems with ZATCA's Fatoora platform. This means invoices must be generated, reported, or cleared through ZATCA's system in real-time or near real-time.
Key Requirements
1. Cryptographic Stamp Every invoice must include a cryptographic stamp (digital signature) using ECDSA secp256k1 encryption. This ensures the authenticity and integrity of each invoice.
2. UUID (Universally Unique Identifier) Each invoice must have a unique UUID that cannot be reused. This prevents duplicate invoicing and ensures a complete audit trail.
3. Hash Chain Invoices must be linked using a hash chain (PIH - Previous Invoice Hash). Each invoice references the hash of the previous invoice, making tampering detectable.
4. QR Code All simplified invoices (B2C) must include a QR code containing: seller name, VAT number, invoice date/time, total amount, VAT amount, and invoice hash.
5. XML Format (UBL 2.1) Invoices must be in XML format conforming to the Saudi Arabian standard (UBL 2.1), not just PDF.
Clearance vs Reporting
Clearance (Standard Invoices - B2B):
- Invoice must be sent to ZATCA BEFORE being shared with buyer
- ZATCA validates and stamps the invoice
- Only after clearance can you share with the buyer
- Response time: typically within seconds
Reporting (Simplified Invoices - B2C):
- Invoice can be issued immediately to customer
- Must be reported to ZATCA within 24 hours
- Batch reporting is allowed
Timeline and Waves
ZATCA is implementing Phase 2 in waves based on annual revenue:
| Wave | Revenue Threshold | Go-Live Date |
|---|---|---|
| ------ | ------------------ | -------------- |
| Wave 1 | Above 3 billion SAR | January 2023 |
| Wave 2 | Above 500 million SAR | July 2023 |
| Wave 3 | Above 250 million SAR | October 2023 |
| Wave 4 | Above 150 million SAR | November 2023 |
| Wave 5 | Above 100 million SAR | December 2023 |
| Wave 6+ | Remaining businesses | Ongoing |
Penalties for Non-Compliance
Failure to comply with ZATCA Phase 2 can result in:
- Fines starting from SAR 1,000 per invoice
- Business suspension
- Reputational damage
How Pro Master Helps
Pro Master is fully ZATCA Phase 2 compliant. Our platform automatically:
- Generates UBL 2.1 XML invoices
- Applies ECDSA secp256k1 digital signatures
- Manages UUID and hash chain
- Generates compliant QR codes
- Submits to ZATCA for clearance/reporting
- Stores compliance records for audit purposes
Start your free trial today and be ZATCA compliant from day one.