ZATCA Phase 2 for FM companies: what to do before 1 Feb 2027
Phase 2 of e-invoicing, which ZATCA calls the Integration Phase, is not new: it has been rolled out wave by wave since 2023. What is new is how far down it now reaches. Wave 25 halves the previous threshold of SAR 375,000, which means almost every operating FM, cleaning or operation-and-maintenance company in the Kingdom is now in scope. This guide explains what changes for an FM business specifically, and what to do in the time left.
Is my company in wave 25?
ZATCA's rule is simple: wave 25 covers all taxpayers whose revenue subject to VAT exceeded SAR 187,500 in any one of 2022, 2023, 2024 or 2025. It is not about this year's turnover. A company that crossed the line once, for example in a year with a large one-off contract, is in scope even if revenue has dropped since.
ZATCA says it will contact every taxpayer in the wave directly and ask them to integrate, and it gives each wave at least six months' notice. Do not wait for the letter to start: the integration itself takes weeks, and you also need your clients' details in order (see the plan below). Companies that were already in an earlier wave (24 and before) should already be integrated.
What actually changes for an FM company?
Phase 1 (since December 2021) required invoices to be generated electronically, with a QR code. Phase 2 adds a live connection to ZATCA:
| Phase 1 (generation) | Phase 2 (integration) | |
|---|---|---|
| Where invoices are made | Any compliant electronic system | A solution connected to Fatoora, with its own ZATCA-issued cryptographic stamp (CSID) |
| B2B tax invoices (companies, owners' associations, government) | Issued directly to the client | Cleared by ZATCA first; the client receives the cleared version, stamped and with ZATCA's QR code |
| Simplified invoices (individual residents, walk-in jobs) | Issued directly | Issued at once, then reported to ZATCA within 24 hours |
| Credit and debit notes | Electronic | Same rules as the invoice they correct: cleared or reported |
| Format | Electronic, with a QR code | XML (or PDF/A-3 with the XML embedded), each invoice chained to the previous one by a hash |
For most FM companies the important row is the second one. Your invoices go to businesses, landlords, owners' associations and government entities, so they are standard tax invoices, and a standard tax invoice is not valid until ZATCA has cleared it. If your system cannot reach Fatoora, you cannot issue the invoice.
Where FM invoicing usually breaks
Maintenance companies have invoicing habits that Phase 2 does not tolerate:
- Invoices typed in Excel or Word. After your integration date they are no longer valid tax invoices. Every invoice must come from the connected solution.
- Monthly contract invoices plus extras. A fixed monthly maintenance fee, then reactive jobs, call-outs and materials on top. Each one is an invoice that must be cleared, so the extras need to be captured with the job, not reconstructed at month end.
- Disputed variations. When a client rejects part of an invoice, you cannot edit or delete it. You issue a credit note that references the original, and the credit note is cleared too.
- Missing client data. Clearance checks the buyer's details. A missing VAT number or national address on a client record means a rejected invoice and a late payment.
- Invoices raised in different places. Site supervisors, the head office and the accountant each producing invoices from different tools will not survive a single chained, numbered sequence.
An 8-step plan before 1 February 2027
- Confirm scope. Check your VAT-able revenue for 2022, 2023, 2024 and 2025. If any year is above SAR 187,500, plan for 1 February 2027.
- List every place an invoice is produced today, including spreadsheets and templates. They all need to move to one connected solution.
- Clean your client master data. Legal name, VAT number and full Saudi national address for every business client.
- Choose your route: an accounting or ERP system with Phase 2 support, a specialist e-invoicing provider, or an operations system that invoices from the job itself.
- Map your invoice types: monthly contract fees, reactive jobs, materials, retentions, and credit notes for disputes. Make sure each type is supported.
- Onboard to Fatoora. In the Fatoora portal you generate a one-time code and use it to register your invoicing solution, which receives its cryptographic stamp (CSID). Plan for the CSID's renewal too.
- Test before go-live. Run each invoice type through ZATCA's compliance checks, including a credit note.
- Switch over cleanly. From go-live, stop all manual invoices, train whoever raises invoices, and keep the archive: e-invoices must be kept and produced on request.
Choosing how to invoice under Phase 2
There are three common routes, and the right one depends on where your work is recorded:
- Your accounting or ERP system, if it supports Phase 2 and your jobs already flow into it.
- A specialist e-invoicing provider that receives your invoice data and handles the XML, stamping and clearance.
- An operations system that invoices from the work order, so the invoice is built from the job, the time and the materials already recorded.
Mubaney, a Saudi facilities-management platform, takes the third route: it has ZATCA Phase 1 and Phase 2 built in, clearing B2B tax invoices and signing and reporting simplified ones, and its full flow passes ZATCA's compliance checks in ZATCA's developer sandbox. Each company connects its own Fatoora account once with a one-time code. Whichever route you choose, start the data clean-up now; it is the step that takes longest. For the bigger picture of running FM on one system, see Mubaney Insights.
FAQ
Does wave 25 apply if my revenue is below SAR 187,500 this year?
Possibly yes. Wave 25 is based on VAT-able revenue in any one of 2022, 2023, 2024 or 2025. If any single year exceeded SAR 187,500, the 1 February 2027 deadline applies, whatever this year's figure is.
Are invoices to individual residents simplified invoices?
Generally yes: an invoice to an individual who is not a VAT-registered business is a simplified tax invoice. Under Phase 2 you issue it immediately and report it to ZATCA within 24 hours, instead of waiting for clearance.
Can I keep issuing invoices from Word or Excel after my integration date?
No. From your integration date, tax invoices must be generated by a solution connected to Fatoora, in ZATCA's format, and cleared or reported. A document typed in Word or Excel is not a valid tax invoice under Phase 2.
Does ZATCA certify e-invoicing software?
ZATCA places the obligation on the taxpayer rather than certifying products. Your solution is checked when you onboard it: it must pass ZATCA's compliance checks before it receives its production stamp. Ask any provider to show you that flow working.
How do I correct an invoice a client disputes?
You do not edit or cancel a cleared invoice. You issue a credit note that references the original invoice, and the credit note goes through the same clearance or reporting as the invoice did. Then you issue a new invoice for the agreed amount if needed.