For businesses in Saudi Arabia, ZATCA E-Invoicing Phase 2 is all about real-time integration. When you issue a Standard Tax Invoice (B2B), your ERP system automatically sends it to the Fatoora platform for Clearance (validation).
If the platform finds a mistake, the invoice is rejected. This stops the sale in its tracks, causes payment delays, and forces you to issue a new document, which is a headache nobody needs.
Understanding the top rejection reasons is the key to preventing them. Here are the 5 most common reasons ZATCA rejects invoices and the simple fix your ERP, like NumberOneERP, should handle instantly.
1. Duplicate Technical Identifiers (UUID or Hash)
This is one of the most serious technical errors and often happens if you try to re-use a rejected invoice’s data.
The Mistake: Every e-invoice must have a completely unique digital fingerprint made up of its UUID (Universal Unique Identifier) and its unique cryptographic Hash (a complex digital code). If you fix an error on a rejected invoice and try to resubmit it without generating new technical identifiers, ZATCA will reject it because the IDs have already been logged in their system as part of a previous, invalid attempt.
The Fix: Your ERP system must have a built-in rule: For every submission, new IDs are generated.
- If an invoice is rejected, the old UUID and Hash are considered spent and must never be re-used.
- Your system must assign a new UUID and recalculate the Invoice Hash before the corrected document is submitted.
2. Missing Mandatory Buyer Information (B2B)
This error happens when critical details about the customer are absent, which is essential for B2B transactions.
The Mistake: For a Standard Tax Invoice (B2B), the buyer needs the document for VAT recovery. ZATCA requires specific information about that registered buyer, including:
- The Buyer’s VAT Registration Number (if they are registered in the KSA).
- The Buyer’s full Address (including the Building Number and Additional Number).
Often, businesses overlook updating their customer master data to include the Saudi National Address details. Missing or incorrect VAT IDs are the fastest way to get rejected.
The Fix: Data Audit and Validation. Implement system-level checks in your ERP to make the Buyer VAT ID and National Address fields mandatory before the invoice can be submitted for B2B sales. If a customer’s data is incomplete, the system should stop the user and prompt them to update the customer record first.
3. VAT Calculation Discrepancy
Even a tiny rounding error can lead to a rejection because ZATCA’s system re-calculates the VAT based on the line items.
The Mistake: The most common mistake is that the Total VAT Amount listed on the invoice doesn’t mathematically match the sum of the VAT calculated for every individual item line.
For example, if you sell three items at SAR 10.00 each, and the VAT rate is 15%:
- The total taxable value is SAR 30.00.
- The total VAT must be exactly SAR 4.50.
If your system uses inconsistent rounding rules, even a difference of SAR 0.01 will cause ZATCA to flag the invoice.
The Fix: Rely on Automation. Your ERP should handle all VAT calculations internally using the precise ZATCA-mandated rules and apply those figures consistently across the entire XML file. Never rely on manual input or external spreadsheets for VAT calculation.
4. Missing Original Invoice Reference (Credit/Debit Notes)
This is a specific but frequent error when a business tries to correct a previously issued invoice.
The Mistake: If you are issuing a Credit Note (to reduce a previous sale) or a Debit Note (to increase a previous sale), you are making an adjustment. ZATCA requires a clear link to the original document that is being corrected.
If the adjustment note is missing the Billing Reference ID (which is the UUID of the original invoice), ZATCA rejects it because the adjustment can’t be validated against a primary transaction.
The Fix: When creating a Credit or Debit Note in your ERP, the process must begin by referencing the original invoice. The system should automatically pull the original invoice’s UUID and insert it into the Billing Reference ID (BT-25) field of the new note.
5. Incorrect Placement of the Digital Signature (Signature Tag)
This is a technical error that only happens when the software solution is not properly certified or configured.
The Mistake: For Phase 2, the Digital Signature (the security tag showing the invoice hasn’t been tampered with) must be placed in a very specific location within the invoice’s XML file structure. If the tag is in the wrong place or the code itself is malformed, ZATCA’s validation engine instantly rejects the file.
The Fix: Use ZATCA-Certified Software. As an SME, your only defense against this error is to use an ERP solution that has been thoroughly tested and certified by ZATCA’s own tools. Compliant software like NumberOneERP handles the secure XML structure and digital stamping process automatically, guaranteeing the tag is in the right place every time.
By partnering with a robust, ZATCA-ready ERP, you delegate these technical complexities to the experts, ensuring your invoices clear the Fatoora platform instantly and your business keeps running smoothly.
For more details, contact us on +966 56 927 1692