The story in brief
- 1Saudi Arabia's tax authority, ZATCA, has named Wave 25 of Phase 2 e-invoicing: businesses whose VAT-taxable revenue was above SAR 187,500 in 2022, 2023, 2024 or 2025.
- 2They must be connected to ZATCA’s Fatoora platform from 1 February 2027, under ZATCA Governor Decision No. 1448-99-238 published on 24 July 2026.
- 3The threshold is half of Wave 24’s SAR 375,000, so many small restaurants, cafés and shops are now in scope.
- 4Wave 25 is the first wave to count 2025 revenue, which brings in businesses that opened in 2025.
- 5Under Phase 2, every invoice is created as a signed XML file with a QR code; B2B invoices are cleared by ZATCA in real time and B2C invoices are reported within 24 hours.
ZATCA, Saudi Arabia's tax authority, has named Wave 25 of Phase 2 e-invoicing. Businesses whose VAT-taxable revenue was above SAR 187,500 in 2022, 2023, 2024 or 2025 must have their invoicing connected to ZATCA's Fatoora platform from 1 February 2027. That is half of the previous threshold, so many small restaurants, cafés and shops in Saudi Arabia are now in scope.
What ZATCA announced
ZATCA published the Wave 25 criteria on 24 July 2026, under Governor Decision No. 1448-99-238. The main points:
- Threshold: VAT-taxable revenue above SAR 187,500 (about US$50,000).
- Revenue years: any of 2022, 2023, 2024 or 2025. This is the first wave to count 2025 revenue, so a business that opened in 2025, or was below the line in earlier years, can be included.
- Deadline: Phase 2 compliance from 1 February 2027.
- Notification: ZATCA notifies the businesses it selects. Until then, businesses should prepare their systems.
How the thresholds have dropped
Phase 2 started on 1 January 2023 for the largest companies and has been rolled out in waves since:
- Wave 23: revenue above SAR 750,000, deadline 31 March 2026.
- Wave 24: revenue above SAR 375,000, deadline 30 June 2026.
- Wave 25: revenue above SAR 187,500, deadline 1 February 2027.
SAR 187,500 is also the level at which businesses can register voluntarily for VAT, so Wave 25 reaches far down into small businesses.
What Phase 2 means in practice
Under Phase 1, a business only had to issue invoices electronically with a QR code. Phase 2 connects the invoicing system to ZATCA:
- Each invoice is created as an XML file in ZATCA's format, with a unique ID, a cryptographic stamp and a QR code.
- B2B tax invoices are sent to Fatoora and cleared in real time, before they are shared with the buyer.
- B2C simplified invoices, such as restaurant and shop receipts, are reported to Fatoora within 24 hours.
- The POS or accounting system is registered with ZATCA, so a paper receipt or a PDF from an unconnected system no longer counts.
What restaurants and small businesses should do now
1. Check your revenue for 2022 to 2025 against SAR 187,500, and watch for ZATCA's notification. 2. Ask your POS and accounting vendors whether their system is Phase 2 compliant and integrated with Fatoora, and when they will connect your account. 3. List every place you issue invoices: each branch POS, delivery orders, the accounting system, catering and B2B invoices. 4. Test early. Use ZATCA's onboarding and test environment well before February, so receipt printing and reporting are proven before the deadline.
What it means for businesses
If your restaurant runs on a POS that cannot connect to Fatoora, February 2027 is the deadline to change or upgrade it. Moving to a new system is also a good moment to put sales, stock and accounts in one place. Our restaurant management system is deployed for restaurants in Saudi Arabia, with tax set up per restaurant, and our custom ERP software team can review how your invoices are produced today and what has to change. Tell us how many branches you run and we will take a look.
Sources
Frequently asked questions
Businesses resident in Saudi Arabia whose VAT-taxable revenue was above SAR 187,500 in any of 2022, 2023, 2024 or 2025, and that were not already in an earlier wave. ZATCA notifies the businesses it selects.
Businesses in Wave 25 must comply with Phase 2 e-invoicing from 1 February 2027, which means their invoicing or POS system must be integrated with ZATCA’s Fatoora platform by then.
Yes, if the restaurant is in a Phase 2 wave. Receipts to customers are simplified tax invoices, and under Phase 2 they must be generated in ZATCA’s XML format with a QR code and reported to Fatoora within 24 hours.
Phase 1, in force since December 2021, requires invoices to be issued electronically with the required fields and a QR code. Phase 2 adds integration: invoices are created in a set XML format, cryptographically stamped and sent to ZATCA’s Fatoora platform.
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