E-invoicing in the Kingdom of Saudi Arabia has shifted from a mere technical option to a mandatory regulatory obligation for every business registered for VAT. As the rollout waves expanded to reach small businesses, no commercial activity has any choice left but to adopt a system capable of issuing invoices compliant with the Zakat, Tax and Customs Authority (ZATCA). In this comprehensive guide we explain everything you need — from the core concepts to the practical steps — and how Odoo gives you an integrated solution that achieves compliance without complexity.
E-invoicing is a process that aims to convert the issuance of invoices and notes from the traditional paper form into a structured electronic form that can be exchanged and processed automatically between the seller, the buyer, and the systems of regulatory bodies. Simply put: instead of writing an invoice by hand or creating it as an ordinary PDF from a word processor, it is generated from an approved electronic system in a machine-readable format carrying a signature and verification data that ensure its integrity and prevent tampering.
ZATCA launched this system under the project name "Fatoora", covering transactions between businesses (B2B), with consumers (B2C), and with government entities (B2G).
The decision was not arbitrary; it is part of the comprehensive digital transformation the Kingdom is leading under Vision 2030. The project's objectives can be summarized as:
The system covers all taxable persons resident in the Kingdom registered for VAT, as well as any party issuing tax invoices on behalf of a taxable supplier. Non-resident businesses are exempt from issuing electronic invoices.
The Authority divided the implementation of e-invoicing into two main phases:
It began on December 4, 2021 and covered all taxable persons at once. This phase requires that invoices be generated and stored electronically through a compliant system containing the mandatory fields, while prohibiting the issuance of handwritten invoices or invoices created via non-compliant editing software. This phase does not require any direct integration with the Authority's systems.
It began in January 2023 and is applied in successive waves based on the size of the business's revenue. In this phase, the invoicing system must be connected to the "Fatoora" platform via APIs, sending invoices to the Authority for verification, in addition to higher technical requirements (such as the cryptographic stamp and structured formats).
The system distinguishes between two main types of invoices, each with a different mechanism in Phase Two:
Issued in transactions between businesses (as well as with government entities and for export). In Phase Two it requires Clearance: the invoice is sent to the Authority in real time and approved before it is shared with the buyer, so that it is legally valid. This is the type that allows the buyer to deduct input tax.
Usually issued in transactions with the end consumer (points of sale). It does not require prior clearance; it is enough to report it to the Authority within 24 hours of issuance, and it must carry a QR code.
For an invoice to be accepted by the Authority, it must meet a set of precise technical requirements. This part specifically is what makes relying on a compliant system like Odoo necessary, because generating these elements manually is nearly impossible:
| Element | Description |
|---|---|
| XML format (UBL 2.1) | A structured, machine-readable file carrying all invoice data according to the approved standard. |
| PDF/A-3 | An archival PDF version with the XML file embedded inside it (for tax invoices). |
| Unique Identifier (UUID) | A globally unique, non-repeating identifier for each invoice. |
| QR code | A quick-response code carrying essential data (seller name, tax number, date, total, tax amount) using TLV encoding. |
| Cryptographic stamp & digital signature | An electronic signature that ensures the invoice's integrity and origin and prevents tampering (based on Public Key Infrastructure, PKI). |
| Invoice Counter (ICV) | An ascending sequential number for each invoice the system issues. |
| Previous Invoice Hash (PIH) | The fingerprint of the previous invoice, linking invoices into a tamper-resistant sequence. |
| Arabic language | Mandatory on the invoice (with the option to add another language). |
Odoo is an integrated accounting and enterprise resource planning (ERP) system, and with the right configuration and development it handles all of the above requirements automatically behind the scenes, so the user only needs to issue the invoice as usual. Here is what it provides:
The compliance journey can be summarized in the following steps, which the OdoShare team carries out on your behalf:
We set up your entire Odoo system, connect it to the Fatoora platform, and ensure 100% compliant invoices — with prices starting from SAR 600 per year.
Failure to comply with e-invoicing requirements exposes the business to financial penalties that escalate by the type of violation and its recurrence, including those related to not issuing the invoice in the approved form, not including the QR code, or delays in integration and reporting. To avoid this entirely, it is enough to adopt a compliant system from the start rather than trying to remediate after a violation occurs.
Yes. Odoo can be configured to issue compliant electronic invoices (XML, PDF/A-3, QR code, and cryptographic stamp) and connected to the Fatoora platform to complete clearance and reporting.
The tax invoice (B2B) requires clearance from the Authority before it is shared with the buyer, while the simplified invoice (B2C) is reported within 24 hours.
All resident businesses registered for VAT; the waves have reached businesses whose revenue exceeds SAR 375,000, i.e. near-complete coverage by mid-2026.
In summary: e-invoicing is no longer an option but a regulatory necessity, and the easiest path to compliance is adopting an integrated, compliant accounting system like Odoo. At OdoShare we handle the entire journey for you, from setup to go-live. Contact us to start your organization's compliance today.
