What is the VAT registration threshold, and how does it read the e-invoicing waves?
Two Saudi numbers tie two systems together: mandatory VAT registration requires VAT-taxable revenue over SAR 375,000, and voluntary registration starts at SAR 187,500. The Phase 2 e-invoicing waves reuse those same two numbers as their test lines. This guide unpacks the relation between the two systems simply and in logical sequence.
The mandatory line: SAR 375,000
If your VAT-taxable revenue exceeded SAR 375,000 in twelve months — or you expect to do so in the next thirty days — VAT registration is mandatory, and you must issue tax invoices and collect and remit the tax. This is the same exact line Wave 24 of Phase 2 e-invoicing adopted in its test, which is why businesses that crossed the registration line found themselves in the first e-invoicing waves.
The voluntary line: SAR 187,500
And if your VAT-taxable revenue is between SAR 187,500 and SAR 375,000 in twelve months, VAT registration is voluntary: you can register voluntarily if it helps you win business or recover tax costs for your clients, or stay unregistered. The Wave 25 test is built on this same number: a person exceeding SAR 187,500 in any of the years 2022–2025 faces Phase 2 e-invoicing, whether registered for VAT mandatorily or voluntarily.
How the tiers work once you are registered
VAT-registered businesses — mandatory or voluntary alike — stop at the same integration obligation for e-invoicing as long as they are in the scope of a wave. Voluntary registration gains the full e-invoicing consequences exactly as mandatory registration does: standard invoices must be cleared, simplified ones reported within 24 hours, and all invoices generated from a connected solution when its wave date arrives. Tax registration and wave scope are two distinct subjects, but closely linked to each other.
If you are under both lines
If your VAT-taxable revenue is under SAR 187,500 across the four tested years and you are not registered, Phase 2 does not apply to you yet. Change the situation by choosing voluntary registration if it makes commercial sense (talk to your accountant) or if your revenue grows past the lower line in later years, where future waves test smaller lines. You are in the zone that watches and doesn't wait: track your annual revenue figures, and know where they sit relative to both lines.
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Read →Asked often, answered straight.
Can I issue tax invoices without being VAT-registered?+
No. Only VAT-registered businesses can issue tax invoices carrying VAT — issuing a tax invoice is one of the effects of registration, not a step before it. If your business clients need a tax invoice to recover their purchase tax, your path to one is registration, voluntary if you are above the SAR 187,500 line.
Why does a small owner register for VAT voluntarily?+
Business owners choose voluntary registration when their clients are VAT-registered businesses that recover the tax — a tax invoice from a registered supplier comes with recoverable tax for your client, and voluntarily registered suppliers can compete for bigger business or head contractor works that require official invoices. It is a commercial option taken with the accountant, as it also subjects you to Phase 2 e-invoicing obligations when your wave comes.
My business has now passed SAR 187,500 — does that mean I'm in Wave 25?+
Not automatically. Waves are set by past revenues of named years, and entry into Wave 25 does not revolve around you because you grew now. However, future waves will include newer years, and growing firms will reach e-invoicing in the future by the same route — by a smaller line each time.
I didn't know I'd crossed the SAR 375,000 line — what now?+
ZATCA imposes fines on late registration under the tax regulations once the obligation has been triggered. And there is no discovery grace period: the obligation runs from the date your VAT-taxable revenue reached the threshold in the past twelve months. If you cannot tell whether you have crossed the line, it is time to ask an accountant, not time to postpone the question.