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Taxation (VAT) in Saudi Arabia

Introduction​

Following the approval of the Unified VAT Agreement, the Kingdom of Saudi Arabia (KSA) has a VAT rate of 15% (revised on July 1, 2020).

VAT Rates in KSA​

  • Standard Rate (15%) — The standard VAT rate.
  • Zero-Rated (0%) — Specific goods and services subject to 0% VAT.
  • Exempt — Some goods and services are exempt from VAT.
  • Out of Scope — Supplies kept out of the scope of VAT.

VAT Registration​

Mandatory Registration​

If total sales exceed SAR 375,000 during a 12-month period, registration is mandatory.

Voluntary Registration​

If total sales exceed SAR 187,500, voluntary registration is available.

VAT Return Filing​

The annual taxable supplies of a business determine the filing frequency:

Annual Taxable SuppliesFiling Frequency
Below SAR 40 millionQuarterly
SAR 40 million and aboveMonthly

Quarterly Filing Periods​

  • April to June → Deadline: 31st July
  • July to September → Deadline: 31st October
  • October to December → Deadline: 31st January

E-Invoicing (Fatoorah)​

E-invoicing was rolled out in two phases in KSA:

Phase 1 (December 4, 2021)​

Tax invoices are issued through a compliant electronic solution with additional required fields.

Phase 2 (January 1, 2023)​

The electronic solution requires integration with ZATCA's systems. E-invoices must be generated in the required format.

Invoice Types​

  • Tax Invoice (B2B) — Issued by a business to another business. Contains all tax invoice elements.
  • Simplified Tax Invoice (B2C) — Issued by a business to a consumer. Contains simplified invoice elements.

Key Definitions​

  • Fatoorah — The Arabic word for electronic invoices in Saudi Arabia.
  • ZATCA — Zakat, Tax and Customs Authority; the governing body for VAT in KSA.