E-invoicing compliance is no longer optional for businesses operating in Saudi Arabia. Phase 1 closed the door on manual invoicing back in December 2021, and Phase 2 — the Integration Phase — has been tightening the net ever since. As of Wave 25, announced July 24, 2026, the threshold has dropped to just SAR 187,500 in annual taxable revenue, meaning nearly every SME in the Kingdom now falls under mandatory ZATCA integration, with a compliance deadline of February 1, 2027. 

Non-compliance penalties range from SAR 5,000 up to SAR 50,000 depending on the violation — a risk no business can afford to ignore. 

For companies running Dynamics 365 Business Central as their ERP, the question is no longer whether to pursue ZATCA integration with Microsoft Dynamics 365 Business Central — it’s how to achieve that compliance quickly and correctly. 

This article breaks down exactly what ZATCA e-invoicing Phase 2 requires, how the integration works inside Business Central, and what to look for in a certified implementation partner for e-invoicing in Saudi Arabia.

Compliance information verified as of August 2026 — Wave 25 (SAR 187,500) is the active wave, with an integration deadline of February 1, 2027. All prior waves (through Wave 24) have passed their deadlines and are now in full enforcement. 

What Is ZATCA E-Invoicing and Why Does Phase 2 Matter?

ZATCA — the Zakat, Tax and Customs Authority — is the Saudi government body responsible for tax and customs regulation in the Kingdom. ZATCA brought Fatoora into effect starting in 2021 — Saudi Arabia’s mandatory e-invoicing framework for e-invoicing in Saudi Arabia, requiring all VAT-registered businesses to generate, store, and share invoices electronically rather than through paper or unstructured digital files. 

The rollout happened in two distinct stages. Phase 1, the Generation Phase, went live on December 4, 2021, and required businesses to produce structured digital invoices. Phase 2 — the Integration Phase — started January 1, 2023, and represents a fundamentally different technical requirement. This phase requires that your invoicing system connect directly to ZATCA’s platform in real time, with invoices cleared or reported before they reach the buyer.

Critically, Phase 2 is not being enforced all at once. ZATCA is rolling it out in waves, targeting taxpayer groups by annual revenue thresholds. As of August 2026, Waves 23 and 24 — covering businesses above SAR 750,000 and SAR 375,000 in annual taxable revenue — have already passed their integration deadlines and are now in full enforcement. The current wave, Wave 25, was announced July 24, 2026, and covers businesses above SAR 187,500 in annual taxable revenue, with an integration deadline of February 1, 2027. 

If your business falls above any of these thresholds and is not yet integrated, compliance is either overdue or has a hard deadline fast approaching. 

Phase 2 – The Integration Phase Explained

Phase 2 compliance goes well beyond simply generating a digital invoice. It introduces a set of technical requirements that your ERP or invoicing system must handle automatically. Every invoice must be generated in XML/UBL format and carry a cryptographic stamp issued by ZATCA — known as a CSID (Cryptographic Stamp Identifier). Standard tax invoices (B2B and B2G) must be submitted to ZATCA’s clearance API for real-time approval before being shared with the buyer. Simplified tax invoices (B2C) follow a reporting model, where invoices are submitted to ZATCA within 24 hours of issuance. Every invoice must also carry an embedded QR code that encodes key invoice data for verification purposes.

This is not a workflow that can be managed manually. Without a system that handles ZATCA Phase 2 automatically, businesses are left either delaying invoices or risking non-compliant submissions — both of which create serious operational and legal exposure.

Why Microsoft Dynamics 365 Business Central Needs a ZATCA Integration

Dynamics 365 Business Central is widely adopted by small and mid-sized businesses across Saudi Arabia for its flexibility, Microsoft ecosystem integration, and robust financial management capabilities. However, Business Central does not ship with native ZATCA Phase 2 compliance built in. Business Central delivers ZATCA compliance through certified third-party extensions available on Microsoft AppSource, rather than a built-in localization module. 

This is an important distinction for any Saudi business currently running Business Central. Having a licensed, deployed instance of Business Central does not automatically make your invoicing ZATCA-compliant. Without a certified AppSource extension handling the CSID onboarding, XML generation, digital signing, and real-time API submission, every invoice your business issues could be considered non-compliant under ZATCA’s Phase 2 requirements.

The business risk is tangible. Non-compliant invoices can be blocked or rejected by ZATCA’s system. Buyers on Phase 2 may refuse to accept invoices that have not been cleared. Beyond the SAR 5,000–50,000 penalty range, businesses face the operational disruption of manual rework, delayed payments, and audit exposure. A certified ZATCA add-on for Business Central is not optional — it is a compliance prerequisite.

How ZATCA Integration with Microsoft Dynamics 365 Business Central Works

When a ZATCA-certified extension is deployed on Business Central, the ZATCA Phase 2 compliance workflow runs end-to-end inside the ERP without requiring manual intervention at each step. Here is how the process works in practice. 

The process begins with CSID onboarding. Before any invoices can be submitted, the business must register its electronic generation solution (EGS) with ZATCA to receive a Cryptographic Stamp Identifier. This certificate ties your Business Central environment to ZATCA’s system and is a prerequisite for the integration to function. A production CSID is issued after a compliance testing phase using a simulation environment.

Once onboarding is complete, invoices are generated inside Business Central in the normal course of operations. The ZATCA extension intercepts each invoice at the point of posting and converts it into the required XML/UBL format — a structured data format that ZATCA’s system can read and validate automatically.

The XML invoice is then digitally signed using the business’s CSID certificate. This cryptographic stamp authenticates the invoice and confirms it has not been tampered with after generation. For B2B and B2G standard tax invoices, the signed XML is then submitted in real time to ZATCA’s clearance API. ZATCA validates the invoice, returns a clearance stamp, and only at that point can the invoice be issued to the buyer.

For B2C simplified tax invoices, the signed invoice is reported to ZATCA’s reporting API within 24 hours of issuance — no prior clearance is required before the invoice reaches the customer.

Every invoice also carries a QR code and is rendered as a PDF/A-3 file, satisfying both the human-readable and machine-readable requirements ZATCA mandates — the exact technical fields required are covered in detail below. 

CSID, XML, and QR Code Requirements in Business Central

For finance and IT teams doing due diligence, these are the four compliance building blocks the Business Central extension must handle: 

• CSID (Cryptographic Stamp Identifier): Issued by ZATCA after EGS registration. Two types are used — a Compliance CSID (CCSID) for testing and a Production CSID (PCSID) for live operations. The PCSID must be renewed periodically and is tied to the specific software solution registered.
• XML/UBL Format: All invoices must be structured in UBL 2.1 XML with ZATCA’s mandatory fields, including seller details, buyer details (for B2B), line items, VAT breakdown, and invoice UUID. The XML must also carry the cryptographic signature as an embedded element.
• Hash Chain (ICV & PIH): Every invoice carries an Invoice Counter Value (ICV) — a sequential number — and the Previous Invoice Hash (PIH), the cryptographic hash of the invoice immediately before it. Together, these link every invoice into an unbroken chain, so ZATCA can detect if any invoice has been deleted, inserted, or reordered after the fact. 
• QR Code: Generated using ZATCA’s TLV (Tag-Length-Value) encoding standard. In addition to the five Phase 1 base fields, Phase 2 requires four more embedded elements: the invoice hash, the cryptographic stamp, the stamp’s public key, and the public key’s signature — making each QR code cryptographically unique and verifiable. The QR is embedded in the printed PDF so it appears on every physical or digital copy of the invoice. 

A certified Business Central extension handles all four of these automatically, with no manual data entry or formatting required from the finance team. 

Evincible Solutions’ ZATCA E-Invoicing App for Business Central

Evincible Solutions has developed a purpose-built ZATCA e-invoicing extension for Business Central, listed on Microsoft AppSource and recognized as an official ZATCA-approved e-invoicing provider.

As a Microsoft Gold and CSP Partner — and an official ZATCA-approved provider — Evincible Solutions brings both the technical credentials and the regional implementation experience that this kind of compliance work demands.

The app covers B2B, B2C, and B2G invoice types, handles real-time clearance and reporting submissions, and generates bilingual invoices in both Arabic and English with XML embedded directly in the PDF. Key capabilities include:

• Single-dashboard e-invoice management
• Duplicate invoice protection to prevent compliance errors
• QR code generation compliant with ZATCA’s Phase 2 standards
• Monthly unlimited transactions with 24/7 support
• Smooth ERP integration with no disruption to daily operations
• Bulk e-invoice generation for high-volume businesses

For Saudi businesses running Business Central and approaching a Phase 2 wave deadline, this is a tested, AppSource-listed solution — not a custom build. Explore the Evincible Solutions ZATCA E-Invoicing app on AppSource, or browse the full range of e-invoicing solutions for Saudi Arabia.

ZATCA E-Invoicing Beyond Business Central: F&O, GP, and Other ERPs

Evincible Solutions’ ZATCA e-invoicing AppSource extension is built specifically for Business Central. However, many Saudi businesses operate on other ERP platforms — and e-invoicing Saudi Arabia compliance requirements apply regardless of which system is in use.

For enterprises on Dynamics 365 Finance & Operations, Evincible Solutions delivers ZATCA Phase 2 integration as a consulting-led services engagement. F&O has its own Microsoft-documented localization framework for e-invoicing, and the implementation is configured to your organization’s specific invoice volumes, entity structure, and integration requirements.

Businesses on Microsoft Dynamics GP are also supported. ZATCA e-invoicing integration for Dynamics GP is handled through a custom integration layer that connects GP’s invoicing workflow to ZATCA’s clearance and reporting APIs, ensuring compliance without requiring a full ERP migration.

For organizations on Oracle, SAP, or other ERP platforms, Evincible Solutions also takes on custom ZATCA integration projects. Each engagement is scoped based on the existing ERP architecture, invoice format, and ZATCA wave timeline — ensuring a compliance path that works within the existing technology stack rather than around it.

Key Benefits of ZATCA Integration for Saudi Businesses

ZATCA compliance is a legal requirement — but the operational benefits of a properly implemented e-invoicing integration extend well beyond avoiding penalties. Saudi businesses that complete Phase 2 integration as part of their broader e-invoicing Saudi Arabia compliance strategy typically see improvements across several areas:

• Faster invoice clearance and payment cycles: Real-time clearance shortens the gap between invoice issuance and buyer payment, improving cash flow predictability.
• Fewer disputes and rejections: Structured XML invoices with validated data leave less room for errors that trigger buyer disputes or ZATCA rejections.
• Lower administrative overhead: Automated submission and QR generation eliminate the manual steps that finance teams previously handled.
• Faster VAT return processing: With all invoice data already submitted to ZATCA in real time, VAT return preparation becomes significantly more efficient.
• Stronger supplier and buyer trust: Compliant, tamper-proof invoices with cryptographic stamps signal reliability to trading partners.

Whether a business operates from Riyadh, Jeddah, Dammam, or Khobar, the compliance timeline is the same. The operational gains, however, compound over time — businesses that integrate early are better positioned for smoother month-end closes and fewer invoicing disputes down the line.

Get Started: Book Your Free ZATCA Compliance Consultation

Current deadline: Wave 25 — SAR 187,500 threshold — 1 February 2027. Businesses above this threshold that aren’t yet integrated are operating on borrowed time, and Waves 23–24 are already in full enforcement. Every invoice cycle that passes without ZATCA clearance is a compliance gap that carries penalties of SAR 5,000 to SAR 50,000 and potential invoice rejection by buyers.

Evincible Solutions is a ZATCA-approved provider and one of the recognized Microsoft Dynamics 365 partners in Saudi Arabia, with a certified Business Central app and proven consulting-led experience delivering ZATCA integration across F&O, GP, and other ERP platforms. Getting compliant starts with a single conversation.

Book your free ZATCA integration consultation today — no obligation, just a clear compliance roadmap tailored to your ERP, your invoice volumes, and your upcoming wave deadline.

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