ZATCA Compliant ERP Software Saudi Arabia

Almost every ERP sold in Saudi Arabia now carries a “ZATCA approved” or “ZATCA certified” badge on its website. Here is the problem: ZATCA does not approve or certify software. It says so in plain words on its own website. What it does is set the technical requirements, and it holds you, the taxpayer, responsible for meeting them.

That changes how you should choose an ERP. The real question is not “is this software approved?” but “how does this software meet Phase 2, who maintains that compliance, and can I prove it works for my invoices?”

I am Mohamed Abdul Baseeth, founder of Maas Consult Middle East Co. We have handled 800+ ZATCA compliance engagements and delivered 1,000+ ERP implementations in Saudi Arabia. We implement ERPNext and TallyPrime, so read our views on those two with that in mind. This guide explains what ZATCA compliance actually means for an ERP, how each of the main options achieves it, and how to verify any system before you trust your invoices to it.

Quick Answer

There is no official list of “ZATCA approved” ERP software. ZATCA publishes a Solution Providers Directory, but states that it is not an approval, and that any taxpayer who meets the requirements is compliant even if their provider is not listed. The ERPs most used for ZATCA Phase 2 in Saudi Arabia include ERPNext (through an integration app), Odoo Enterprise (native Saudi module), SAP S/4HANA (SAP Document and Reporting Compliance) and SAP Business One (partner add-ons), Microsoft Dynamics 365 Finance (native Saudi e-invoicing) and Business Central (partner apps), Oracle NetSuite (partner solutions), TallyPrime (built in), and cloud tools such as Zoho Books, Qoyod, Daftra and Wafeq (built in). Choose based on how well the system fits your business, then verify its Phase 2 setup with your own invoices in ZATCA’s sandbox.

Key Takeaways

• ZATCA’s Solution Providers Directory is “not considered as an approval” of any solution. “ZATCA approved software” is a marketing phrase.
• Phase 2 means clearance of B2B tax invoices before they reach the buyer, and reporting of B2C simplified invoices within 24 hours.
• ZATCA lists 11 functions a compliant e-invoicing solution must not have, including editable invoices and resettable counters. These are a useful test for any ERP.
• How an ERP achieves compliance matters: native module, vendor add-on, partner app or middleware each come with different risks.
• Wave 25 brings businesses with VAT-subject revenue above SAR 187,500 in any of 2022 to 2025 into Phase 2, with an integration deadline of 1 February 2027.

Is There Such a Thing as “ZATCA Approved” Software?

No. ZATCA’s Solution Providers Directory is an indicative list of providers who have expressed willingness to offer compliant solutions and have passed ZATCA’s qualification process. But the page is explicit on three points:

• The list “is not considered as an approval by ZATCA” of the providers’ solutions.
• It is a guiding, non-legally binding list, and taxpayers can use any company.
• ZATCA “considers any taxpayer who meets the requirements to be compliant, even if the Solution Provider is not included” in the directory.

So when a vendor says “ZATCA approved”, the most it can accurately mean is “listed in the directory” or “our solution passed ZATCA’s compliance checks”. Neither transfers responsibility away from you. If your invoices are wrong, the penalty is yours.

That is not a reason to ignore the directory. Being listed shows a provider has engaged with ZATCA’s process. It is simply one signal among several, not a guarantee.

What a ZATCA Compliant ERP Must Actually Do

ZATCA’s Detailed Guidelines for E-Invoicing set out what Phase 2 requires. In ERP terms, the system must do all of the following.

Generate Invoices in the Right Format

Invoices must be generated as XML, or as PDF/A-3 with the XML embedded, with all mandatory fields, a UUID and a hash for every document.

Clear B2B Tax Invoices Before They Reach the Buyer

Standard tax invoices, and their credit and debit notes, must be sent to ZATCA’s Fatoora platform in real time and cleared before they are shared with the buyer. ZATCA applies its stamp and generates the QR code during clearance, and the cleared invoice must come back into your ERP.

Report B2C Simplified Invoices Within 24 Hours

Simplified invoices are stamped by your own solution using the cryptographic stamp identifier (CSID) issued by ZATCA, carry a Phase 2 QR code with nine fields in TLV Base64 format, and must be reported to Fatoora within 24 hours.

Chain Every Invoice

Each invoice carries the hash of the previous invoice and its own counter value, so the sequence cannot be broken. The counter must never be reset.

Handle Corrections the Right Way

Issued invoices cannot be edited or cancelled. Corrections are made with credit or debit notes that reference the original invoice.

Onboard Every Invoicing Unit

Each invoicing unit or device must be onboarded with ZATCA through a one-time password from the Fatoora portal, which the ERP uses to obtain its CSID. A business with a head office ERP, branch POS terminals and an online store may need several units onboarded.

Cope with Connection Failures

If a connection drops, simplified invoices must be reported once it is restored, within the 24-hour window. For B2B tax invoices, an uncleared invoice is not eligible for VAT deduction by the buyer, which is why customers will push back on them.

The 11 Functions ZATCA Says a Compliant Solution Must Not Have

This is the most useful and least known part of ZATCA’s guidance. From the start of the Integration Phase, an e-invoicing solution must not have any of these functions:

1. Anonymous access
2. Ability to operate with a default password
3. Absence of user session management
4. Ability to alter or delete generated e-invoices
5. Ability to modify or delete logs
6. Generating invoices with inaccurate timestamps
7. Non-sequential log generation
8. Resetting the invoice counter
9. Generating more than one invoice sequence
10. Time changes
11. Exporting the stamping keys

Use this list in every software demo. Ask the vendor to show you that a submitted invoice cannot be edited, that the counter cannot be reset, and that users cannot share a default login. If they cannot show it, the badge on their website means very little.

How the Main ERP Options Achieve ZATCA Phase 2

Every serious ERP sold in Saudi Arabia can be made Phase 2 compliant. The difference is how, and who keeps it compliant when ZATCA updates its specifications.

Two points stand out. First, “native” is not automatically better. A well-maintained open-source app or partner add-on can be as reliable as a vendor module. Second, partner-delivered compliance is only as good as the partner’s commitment to keep it updated. Ask who will update it, how quickly, and at what cost, the next time ZATCA changes the specifications.

The Options in More Detail

ERPNext

ERPNext is open source with no per-user licence fees, which suits Saudi SMEs and mid-market companies with many users. Phase 2 is delivered through an integration app. The best-known is the KSA Compliance app published by LavaLoon on the Frappe Cloud marketplace: free and open source under AGPL, it supports Phase 1 and Phase 2, simplified and standard invoices, onboarding, multiple devices and companies, and ZATCA sandbox testing. Other commercial ZATCA apps for ERPNext also exist.

Best for: businesses that need a full ERP (inventory, manufacturing, projects, HR) without enterprise licence costs. Watch for: the quality of the implementation partner, and who maintains the ZATCA app in your setup. Our ERPNext ZATCA integration guide walks through the setup.

Odoo

Odoo Enterprise includes a native Saudi e-invoicing module for Phase 2. Odoo Community does not, so Community users need a third-party or custom connector.

Best for: businesses that want a modular ERP with a large app ecosystem. Watch for: whether your plan is Enterprise or Community, and which modules your quote actually includes.

SAP S/4HANA and SAP Business One

For S/4HANA, Saudi e-invoicing is handled through SAP Document and Reporting Compliance, usually with SAP Business Technology Platform, deployed by an SAP partner. For SAP Business One, Phase 2 is typically delivered through partner-built add-ons.

Best for: companies inside a global SAP group, or large enterprises with complex processes. Watch for: the cost and complexity of the compliance layer, and for Business One, which partner add-on you are buying and who supports it. Our comparison of ERPNext and SAP for Saudi SMEs covers when SAP is still the right call.

Microsoft Dynamics 365

Dynamics 365 Finance and Supply Chain Management support Saudi Phase 2 natively. Microsoft’s documentation describes onboarding, invoice clearance for tax invoices and invoice reporting for simplified invoices. Business Central is different: Saudi e-invoicing is provided through partner apps on Microsoft AppSource.

Best for: businesses already invested in Microsoft systems. Watch for: for Business Central, which partner app you depend on.

Oracle NetSuite

NetSuite is often chosen by Saudi subsidiaries of international groups. Phase 2 is typically delivered through partner-built solutions, so confirm exactly which one your implementation partner uses and that it covers both clearance and reporting.

Best for: multinational subsidiaries standardising on NetSuite. Watch for: the same partner-maintenance question as above.

TallyPrime

TallyPrime includes Saudi e-invoicing as a built-in feature, maintained by Tally Solutions. In TallyPrime 7.0, released for the Kingdom in December 2025, B2C invoices generate their QR codes when saved or printed without waiting for portal confirmation, and invoices pending for more than two days are checked automatically.

Best for: accounting-first SMEs and trading businesses, especially those whose accountants already know Tally. Watch for: whether you will outgrow accounting-first software. Our TallyPrime team in Saudi Arabia can advise on the setup.

Zoho Books, Qoyod, Daftra and Wafeq

These cloud accounting tools build Phase 2 into the product. Zoho Books handles onboarding with the Fatoora OTP and pushes invoices, credit notes and debit notes to Fatoora. Qoyod, Daftra and Wafeq describe built-in clearance for B2B invoices and reporting for B2C invoices.

Best for: small businesses with simple stock needs that want low-maintenance cloud accounting. Watch for: limits on inventory, manufacturing and multi-branch operations as you grow.

How to Verify Any ERP Is Actually ZATCA Compliant

Do not rely on a badge. Ask for these ten things before you sign.

1. A live demo with your own invoices, including a B2B tax invoice, a B2C simplified invoice, a credit note and a debit note.
2. Proof of clearance: the cleared B2B invoice coming back from Fatoora with ZATCA’s stamp and QR code.
3. Proof of reporting: simplified invoices reported within 24 hours, with the acknowledgement visible.
4. The 11 prohibited functions test: show that invoices cannot be edited or deleted, the counter cannot be reset and there is no shared default login.
5. Onboarding of every unit: how head office, branches, POS terminals and online sales are each onboarded.
6. Offline behaviour: what happens when the internet drops at a branch.
7. Sandbox testing: evidence that your configuration has passed ZATCA’s sandbox checks.
8. Who maintains compliance: vendor, app publisher or partner, and how updates are delivered.
9. Error handling: how rejected invoices are flagged and resubmitted.
10. Arabic output: correct Arabic and bilingual invoice formats.

If a vendor cannot show you all ten, keep looking, however good the badge looks.

How to Choose the Right Option for Your Business

Compliance is the entry ticket, not the deciding factor. Once you know an ERP can meet Phase 2, choose on fit:

• Small business with simple needs: a cloud accounting tool or TallyPrime is often enough.
• Growing SME with inventory, branches or manufacturing: a full ERP such as ERPNext or Odoo.
• Large enterprise or part of a global group: SAP, Dynamics 365 Finance or NetSuite, usually following group policy.

For a broader comparison on business fit rather than compliance, see our guide to the best ERP for small businesses in Saudi Arabia. If you are in Riyadh and weighing standalone e-invoicing tools against full systems, our guide to ZATCA software in Riyadh compares the categories.

ZATCA Wave 25: The Deadline Driving Decisions Now

On 24 July 2026, ZATCA announced the twenty-fifth wave of Phase 2. It covers taxpayers whose VAT-subject revenue exceeded SAR 187,500 in 2022, 2023, 2024 or 2025. ZATCA notifies the targeted taxpayers, who must integrate with Fatoora by no later than 1 February 2027, which is about 15 weeks away. As of this update, ZATCA has not announced a later wave, and it has committed to giving at least six months’ notice for each one.

If you are in scope and still choosing an ERP, the timeline is tight. A sensible approach is to fix compliance on your current system first if you can, then move to a new ERP on a calmer schedule. Our complete guide to ZATCA Phase 2 explains the full process, and our guide to ZATCA penalties in 2026 sets out what missing the deadline can cost.

Common Mistakes When Choosing a ZATCA Compliant ERP

• Trusting the badge. “ZATCA approved” is not an official status.
• Testing only one invoice type. Credit notes, debit notes and B2C invoices fail more often than standard invoices.
• Forgetting other invoicing points. POS terminals, e-commerce stores and branch systems all need to be compliant.
• Ignoring who maintains the integration. A partner app with no update plan becomes a risk at the next specification change.
• Choosing on compliance alone. Every serious option can comply. Fit, cost and support decide whether the ERP works for you.
• Leaving it to the last month. Onboarding, sandbox testing and staff training all take time.

From the Field

The businesses that get into trouble with ZATCA rarely chose the wrong software. They chose good software, set it up for one invoice type, and never tested the rest. In our compliance work, credit notes for returns and invoices from a second branch are where the problems usually show up. Test those first.

Frequently Asked Questions

Which accounting software is approved by ZATCA in Saudi Arabia?

None, strictly speaking. ZATCA does not approve or certify software. It publishes a Solution Providers Directory, but says the list is not an approval and that any taxpayer who meets the requirements is compliant, whether or not their provider is listed.

What makes an ERP ZATCA compliant?

For Phase 2, it must generate invoices in XML or PDF/A-3 with embedded XML, clear B2B tax invoices with ZATCA before sharing them, report B2C simplified invoices within 24 hours, stamp and chain invoices correctly, handle credit and debit notes, and avoid the 11 functions ZATCA prohibits.

Is ERPNext ZATCA compliant?

ERPNext can meet Phase 2 through a ZATCA integration app, such as the free, open-source KSA Compliance app, combined with correct configuration and sandbox testing.

Is Odoo ZATCA approved?

No software is ZATCA approved. Odoo Enterprise includes a native Saudi e-invoicing module for Phase 2, while Odoo Community needs a third-party or custom connector.

Is SAP Business One ZATCA compliant?

SAP Business One can be made Phase 2 compliant through partner-built add-ons. Confirm which add-on your partner provides and how it is maintained.

Is TallyPrime ZATCA compliant?

TallyPrime includes built-in Saudi e-invoicing maintained by Tally Solutions, with Phase 2 improvements in TallyPrime 7.0.

Do I need a new ERP to comply with ZATCA Phase 2?

Not necessarily. If your current system can be made compliant through its vendor or a reliable integration, that may be the fastest route. Replace it only if it cannot be made compliant or no longer fits your business.

What is the ZATCA Solution Providers Directory?

It is an indicative list of providers who have expressed willingness to offer compliant e-invoicing solutions and passed ZATCA’s qualification process. It is not an approval and is not legally binding on taxpayers.

What is the Wave 25 deadline?

Taxpayers with VAT-subject revenue above SAR 187,500 in any of 2022 to 2025 must integrate with Fatoora by 1 February 2027.

What is the best ZATCA software for a business in Riyadh?

The one that fits your business and passes the verification checklist with your own invoices. For small businesses that is often a cloud tool or TallyPrime. For growing businesses with inventory or manufacturing, a full ERP such as ERPNext usually fits better.

Final Thoughts

The badge race has made choosing a ZATCA compliant ERP more confusing than it needs to be. Strip it away and the decision is simple: pick the system that fits how your business works, confirm how it achieves Phase 2 and who keeps it current, and test it with your own invoices before you go live. With Wave 25 due on 1 February 2027, the testing step is the one not to skip.

If you would like an independent check of your current system against the checklist above, our team runs ZATCA e-invoicing readiness reviews for businesses across Saudi Arabia.