Get 100% ZATCA Phase II compliant with ClearTaxGet 100% ZATCA Phase II compliant with ClearTax
Seamless integration
with any ERP/POS
Seamless integration with any ERP/POS
E-invoice generation in
a fraction of a second
E-invoice generation in a fraction of a second
PDF/A3 E-invoices with
XML embedded
PDF/A3 E-invoices with XML embedded

e-Invoicing Solutions in Saudi Arabia: On-Premises vs Cloud-Based Solutions

Updated on: Apr 25th, 2023


11 min read

social iconssocial iconssocial iconssocial icons

The tax authority in Saudi Arabia, Zakat, Tax and Customs Authority (ZATCA), intends to implement e-invoicing in two phases across the country. The e-Invoicing initiative in Saudi Arabia covers all resident taxpayers registered under VAT except non-residents (for VAT purposes).

Accordingly, ZATCA implemented phase 1 of e-invoicing in Saudi Arabia from 4th December 2021. Also, till now, ZATCA notified two waves under phase 2 of Saudi Arabia e-invoicing as follows:

  1. Wave 1 under phase 2: VAT-registered businesses in KSA  having more than SAR 3 billion turnover in 2021 fall under wave 1 of phase 2 and must implement phase 2 beginning from 1st January 2023.
  2. Wave 2 under phase 2: VAT-registered businesses in KSA with more than SAR 500 million turnover in 2021 fall under wave 2 of phase 2, and they shall begin phase 2 implementation starting from 1st July 2023.

Hence, the e-invoicing applicable taxpayers should understand and comply with the phase 2 requirements. The businesses must integrate their ERP/POS/accounting systems with the Fatoora portal using compliant e-invoicing software in Saudi Arabia. Two types of e-invoicing solutions are available for taxpayers; one is on-premises, and the other is cloud-based.

Let’s go through both types of e-invoicing solutions in this article.

What is an on-premises e-invoicing solution in Saudi Arabia?

An e-invoicing solution completely built in-house of an organisation is called as an on-premises (on-prem) e-invoicing solution. So, the e-invoicing solution's infrastructure will be managed by you and in your control. In this type of e-invoicing solution, you must:

  • Understand the ZATCA rules and regulations
  • Acquire the required infrastructure for both processing and storage
  • Develop e-invoicing solution on their own for different types of business cases while taking into account the rules and regulations
  • Run trials to check the ability of the solution to handle all types of transactions and the expected volumes
  • Register the e-Invoice Generating Solutions (EGS) or devices with ZATCA
  • Integrate with API endpoints of Fatoora portal
  • Arrange the archival facility to store e-invoices for a period of 6 years
  • Update the processes impacted by e-invoicing
  • Training the staff on how to use the e-Invoicing solution
  • Handle errors and maintain the solution
  • Update the solution as per ZATCA updates
  • Upgrade the solution as per business requirements

Also, you shall assign dedicated resources to perform the above tasks, which requires greater coordination between the finance and IT teams.

What is a cloud-based e-invoicing solution in Saudi Arabia?

In a cloud-based e-invoicing solution, businesses can log in to a cloud platform and perform all e-invoicing functions. These solutions work on shared infrastructure, and the solution provider handles the different requirements. Hence, you don’t have to acquire or maintain any infrastructure. All you’ve to do is choose a compliant e-invoicing software provider and onboard with them.

Your cloud-based e-invoicing solution provider shall assist you in all aspects, including:

  • Device registration of EGS
  • Integration with Fatoora portal
  • Archival of e-invoices for a period of 6 years in PDF-A3
  • Updating solution as per ZATCA updates
  • Auto-scaling of solution as per business requirements
  • Training & 24*7 support to concerned staff who work day-in day-out with e-Invoicing
  • Service-Level Agreement (SLA) for quick error resolution

When you opt for the cloud-based e-invoicing software in Saudi Arabia, you don’t have to go through the rigorous process of developing the solution and maintenance of it.

On-premises vs cloud-based e-invoicing solution in Saudi

The following are the major differences between on-premises and cloud-based e-invoicing solutions:


On-premises e-invoicing solution

Cloud-based e-invoicing solution

Knowledge of ZATCA rules and regulationsMandatoryNot mandatory and will be explained by the solution provider
Infrastructure to be acquired byBusinesses on their ownSolution provider manages the required infrastructure and is cost effective
Dedication of resourcesNeed dedicated resources from IT and finance teamsNo need of dedicated resources and requirement is only at the starting of the e-Invoicing project
Efforts requiredVery HighMinimal
Cost involvedVery HighModerate compared to the on-premises solution
Maintenance of the infrastructureSelf-managementSolution provider maintains the shared-infra
Auto-scaling of the solutionHight cost and efforts are involvedComes as an in-built feature
Updation of solution as per ZATCA updatesNeed to update solution on ownSolution provider takes care of updates time-to-time
Chances of downtimeHighVery minimal
Error handlingNeed to train staff to understand the technical aspects and handle errors24*7 support will be available from solution provider; comes with SLA
Data securitySecuredSecured as data will be stored in encrypted form
Data recovery Need to build the own backup systemsComes as a default feature with cloud-based e-invoicing solution
Invoice archival facilityNeed to maintain a own archival facilitySolution comes with invoice archival facility