Author
Sebastian Luermann
Attorney at Law (Germany) I Legal Consultant (UAE) I Senior Associate
October 2026 – Tax Law – Compliance
Both the UAE and Saudi Arabia are tightening their electronic invoicing requirements. In the UAE, businesses with annual revenue of AED 50 million or more must appoint an accredited service provider (ASP) by 30 October 2026, and the obligation applies from 1 January 2027. In Saudi Arabia, the tax authority ZATCA has halved the revenue threshold for connecting to the Fatoora platform from SAR 375,000 to SAR 187,500 with Wave 25; the deadline is 1 February 2027.
For companies active in both countries this is more than a scheduling issue: the systems follow different technical models, have different rollout schedules and different penalties.
This article sets the two regimes side by side, explains the key differences and shows what companies should do now.
The Two Systems at a Glance
| Criterion | UAE | Saudi Arabia |
|---|---|---|
| Authority | Ministry of Finance (MoF) and Federal Tax Authority (FTA) | Zakat, Tax and Customs Authority (ZATCA) |
| Technical model | Decentralised: exchange through accredited service providers (five-corner Peppol model), reporting to the FTA | Centralised: API connection to ZATCA's Fatoora platform |
| Invoice format | Structured XML invoice under PINT AE; PDF, Word or scans do not qualify | XML invoice (UBL 2.1) with cryptographic stamp, UUID and QR code |
| Transactions covered | B2B and B2G; B2C excluded until further notice | B2B invoices are cleared by ZATCA before issue; simplified B2C invoices must be reported within 24 hours |
| Rollout | By revenue size: AED 50m or more (1 Jan 2027), below (1 Jul 2027), government (1 Oct 2027) | In waves by taxable revenue; most recently Wave 25 |
| Next deadline | 30 October 2026: appoint an ASP (AED 50m or more in revenue) | 1 February 2027: integration complete (Wave 25) |
| Penalties | AED 5,000 per month; AED 100 per invoice (max. AED 5,000 per month); AED 1,000 per day for late notifications | Reportedly SAR 5,000 to SAR 50,000 |
UAE: What Applies Now
The rollout runs in stages by annual revenue. Revenue means gross income for the most recent accounting period, not profit. A voluntary pilot phase has been running since 1 July 2026. Business-to-business transactions and supplies to government entities are covered; however, transactions with individuals who are not acting in a business capacity are not. VAT registration alone does not decide whether a transaction is in scope.
| Category | Appoint ASP by | Mandatory from |
|---|---|---|
| Annual revenue of AED 50m or more | 30 October 2026 | 1 January 2027 |
| Annual revenue below AED 50m | 31 March 2027 | 1 July 2027 |
| Government entities | 31 March 2027 | 1 October 2027 |
The deadline to appoint a provider for larger businesses was earlier moved from 31 July to 30 October 2026. The 1 January 2027 start date was left unchanged.
New Since 1 October 2026: Only Fully Accredited Providers
Under Ministerial Decision No. 168 of 2026, which took effect on 1 October 2026, the Ministry of Finance abolished the preliminary approval stage for service providers. Providers may now offer their services only once fully accredited. Providers with preliminary approval have 30 days from 1 October to meet the requirements. Companies should therefore check their provider’s accreditation status before signing a contract.
Penalties in the UAE
Under Cabinet Decision No. 106 of 2025, businesses required to use the system face the following administrative penalties:
- AED 5,000 per month (or part of a month) if the system is not implemented or no ASP is appointed in time
- AED 100 per e-invoice or credit note not issued or transmitted on time, capped at AED 5,000 per month
- AED 1,000 per day for late notification of system failures or changes to registration details
In addition, non-compliant invoices risk rejection and the buyer may lose the right to deduct input VAT.
Saudi Arabia: Wave 25
On 24 July 2026 ZATCA announced Wave 25 of Phase 2 (the integration phase). It covers resident taxpayers whose taxable revenue exceeded SAR 187,500 in any of the years 2022, 2023, 2024 or 2025. It is the first wave to take 2025 revenue into account. What matters is whether the threshold was exceeded in one of those years, not current revenue. Integration must be completed by 1 February 2027.
| Wave | Revenue threshold (SAR) | Deadline |
|---|---|---|
| Wave 23 | above 750,000 | 31 March 2026 |
| Wave 24 | above 375,000 | 30 June 2026 |
| Wave 25 | above 187,500 | 1 February 2027 |
Wave 25 is the first to fall below the SAR 375,000 threshold for mandatory VAT registration. Voluntarily registered small businesses are therefore also brought into scope.
ZATCA generally notifies affected taxpayers at least six months before the deadline. Anyone who exceeded the threshold in one of the four years should not wait for the notification, however, but plan the integration now.
The technical requirements of the integration phase include:
- Invoices as XML files in UBL 2.1 format
- Cryptographic stamp, digital signature, UUID and QR code for each invoice
- Connection to Fatoora via API
- Clearance of B2B invoices by ZATCA before they go to the customer
- Reporting of simplified B2C invoices within 24 hours
Penalties in Saudi Arabia
Fines of SAR 5,000 to SAR 50,000 are reportedly applicable to violations of the integration phase. ZATCA is said to start with warnings for first violations and to impose escalating fines for repeat violations within twelve months.
Note: The penalty logic differs: in the UAE the penalties are mostly time- and item-based (per month, per invoice, per day), whereas in Saudi Arabia they are described as a fine range with escalation. The figures are based on reports; the official decisions are decisive.
What Companies Active in Both Countries Should Watch
- Clarify the scope in each country. In the UAE, revenue category (gross revenue) and the type of transaction matter; in Saudi Arabia, taxable revenue for 2022 to 2025 against the SAR 187,500 threshold.
- Plan for two technical routes. A solution for one country does not automatically replace the connection in the other, because the model and format differ.
- Choose your UAE provider carefully. Check accreditation status and appoint in time, for larger businesses by 30 October 2026.
- Clean up master data. Tax IDs, customer data and tax codes must be complete and correct so that the mandatory fields of both systems can be populated.
- Use the test phases. The UAE pilot phase has been running since 1 July 2026. In Saudi Arabia, allow weeks for test connection and validation.
- Assign responsibilities. Give tax, finance, IT and operations clear roles. System failures must also be reported on time in the UAE.
- Arrange a legal review. Have scope, deadlines and contracts with providers reviewed for both countries.
Frequently Asked Questions
Is one software solution enough for both countries?
Not automatically. The UAE requires transmission through an accredited service provider under the Peppol model, while Saudi Arabia requires a connection to the Fatoora platform. Check whether your system supports both routes and formats.
Does the UAE requirement also cover business with private customers (B2C)?
As things stand, B2C is excluded until further notice. Transactions between businesses and supplies to government entities are covered.
What applies to businesses with revenue below AED 50 million?
Later dates apply: appoint a provider by 31 March 2027, mandatory from 1 July 2027. Preparation should still start now, because data clean-up and system changes take time.
How do I know whether my Saudi business falls under Wave 25?
Check your taxable revenue for 2022 to 2025 against the SAR 187,500 threshold. If it was exceeded in any of those years, your business is generally covered. Compare this with any notification from ZATCA, but do not wait for one.
How TME Legal Can Help
TME Legal advises companies in the UAE and Saudi Arabia on compliance requirements relating to electronic invoicing. Our services in this area include:
- Assessing scope and deadlines in the UAE and in Saudi Arabia
- Reviewing contracts with service providers (ASPs) and software vendors
- Advising on compliance processes and responsibilities
- Supporting you with enquiries and proceedings of the tax authorities
- Coordinating the requirements for companies operating in both countries
If you would like to have the obligations and deadlines that apply to your company reviewed, we would be glad to help.
This article is for general information only and does not constitute legal advice. It is based on public reports as at October 2026; deadlines, guidance and penalties of the authorities in the UAE and Saudi Arabia continue to evolve. Please contact TME Legal for advice tailored to your individual situation.
