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Value Added Tax (VAT)

Value Added Tax (or VAT) is an indirect tax imposed on all goods and services that are bought and sold by businesses, with a few exceptions. VAT is applied in more than 160 countries around the world as a reliable source of revenue for state budgets.

VAT is imposed at each stage of the supply chain ribution to the final sale of the good or service.
VAT infographic

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes

Terms & definitions

VAT

Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person

A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement

The Unified VAT Agreement for the Council States

VAT Group

Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity

An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports

Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax

The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax

Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax

Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice

Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies

Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies

Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies

Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism)

A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold

The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold

The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes
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The General Authority of Zakat and Tax (GAZT) is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia. It does so in close coordination with other relevant entities.​
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Regulations

The VAT Implementing Regulations ex​pand on the areas covered within the KSA VAT Law, detailing rules for implementation and giving taxpayers sufficient information to complete their VAT compliance requirements. The Implementing Regulations cover:
  • Definitions
  • Taxable Persons
  • Supplies of Goods and services
  • Place of Supply
  • Exempt Supplies
  • Zero-rated Supplies
  • Value of Taxable Supplies
  • Imports
  • Calculation of Tax payable
  • Procedure and administration
  • Refunds of Tax
  • General provisions



Key points of VAT Implementing Regulations

Applied to business conducting a taxable economic activity.

Economic activity

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  • Activity that is conducted in an ongoing and regular manner
  • Includes commercial, industrial, agricultural or professional activities or services or any use of material or immaterial property and any other similar activity

Taxable person

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  • Conducts an economic activity
  • Works independently for the purpose of generating income
  • Registered or obligated to register for VAT

VAT Rate treatment of goods and services

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VAT Rate

Output tax

Input tax

Standard rated
5%
Deductible
Zero-rated
0%
Deductible
Exempt
nil
Non-deductible*
Out of scope
N/A
N/A

Bad debt

Business unable to collect recivables may reduce the Output Tax previously filed if below requirements are met.

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Taxable Person holds a certificate from his certified accountant indicating that the unpaid consideration has been written off in his books
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Recivables are due at least 12 months
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Supply to non related person
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This tax has already been filed and paid​​​​

Facilitating SMEs compliance with VAT

Cash accounting

Businesses whose sales do not exceed SAR 5 MN annual supplies can use cash accounting (vs. accrual for larger), whereby their Tax Return includes only Output Tax and Input respect to already paid, rather then invoiced, goods and services

Simplified invoicing

Simplified Tax Invoice may be used if invoice Value < SAR 1,00 and should include only the issue date, supplier name, address and TIN, description of goods and services supplied, the Consideration payable for the Goods or services and value of VAT payable

Frequency of filling

Filing of Tax Return every three months for businesses with annual supplies < SAR 40 MM

Phasing

VAT registration for businesses with annual Sales < SAR 1 MM can be delayed till 20 December 2018




Penalties

Description of offence
Fine
Submit false documents to evade the payment or reduce VAT due or unlawfully obtain refunds for tax
At least the amount of the VAT due, up to three Times the value of the goods or service subject of the evaded tax
Move or attempt to move goods in or out of the Kingdom without paying the VAT due
At least the amount of the VAT due, up to three Times the value of the goods or service subject of the evaded tax
Failure to apply for VAT registration
SAR 10,000
Failure to submit the Tax Return
5% - 25% of the value of the Tax that would have had to be declared
Failure to pay tax due
5% of the value of the unpaid Tax for each month or part thereof the Tax has not been paid
Issuance of Tax Invoice by non-registered Person
Maximum SAR 100,000 without prejudice to any stricter penalty provided in any other law
Failure to keep Tax Invoices, books, records and accounting documents
Maximum SAR 50,000
Prevention or obstruction of GAZT employees from performing duties
Maximum SAR 50,000
Violation of any provision of the VAT Regulations or the VAT Law
Maximum SAR 50,000
Filing incorrect tax return, amend a tax return or file any document resulting in a lower amount due
50% of the value of the difference between the calculated Tax and the Tax due
Note: If the same violation is repeated within three years from the date of issuing the Authority's final decision of the violation, it is permissible to double the fine imposed on the offender under that decision.


    What you can expect from GAZT

    Taxpayer Charter

    Taxpayer Charter

    What you can expect from GAZT

    We will engage with you in a professional, efficient and effective manner at all times

    You can expect all GAZT representatives and agents to treat you with courtesy and respect at all times. We aim to provide you with a professional service and assistance in the most effective and efficient manner within the time frame specified in the law and regulations.

     
    We will interact with you as a partner in VAT implementation success

    You can expect to be treated as an honest and truthful individual/person.  

    Specifically, we presume that:

    • The information you provide is complete and accurate
    • You pay any VAT you owe
    • You claim only what you are entitled to
    If you make a mistake, we give you the opportunity to explain your mistake and to rectify it. We endeavor to listen to you and take your explanation into account.​
     
    We will make it easy for you to access the information you require

    We will try to make your engagement with us in the sense of partnership, in order to facilitate VAT compliance. This involves making it as easy as possible for you to understand your VAT obligations and how to meet them and find answers to all your questions – by, for example, providing publicly available guidance.

     
    We accept that someone else can represent you

    We fully accept for you to be represented by a person of your choice and to provide him with the advice and assistance in fulfilling your VAT obligations. Your representative may deal directly with GAZT staff on your behalf.

    Advice and assistance may include:
    • Advising on the VAT treatment of transactions
    • Preparing VAT returns and VAT refund requests, preparing VAT and Group VAT registration applications
    • Representing you in any disputes with GAZT
    We can only deal with representatives if you inform GAZT and authorize GAZT to deal with your representative.​
     
    We will deal with complaints promptly and in a fair manner
    Where you are not satisfied with our service, you have the right to submit a complaint. We recommend that you first try to resolve the matter directly with the relevant GAZT member of staff. If, however, this does not resolve the matter, we welcome you to submit your complaint through any of our channels. Any complaint will be taken seriously, reviewed and responded to in a timely manner.​


     
    Bilingual Service

    You are entitled to our service in Arabic or English, at your choice.​​

     
    Data protection

    When handling your data we will ensure that any information you provide is protected and stored securely, that we share it with other organizations only when it is lawful to do so and that we don’t keep the information longer than necessary.​

     
    What GAZT expects from you

    What GAZT expects from you

    Accuracy in transactions
    In engaging with GAZT, you should always be truthful and act within the law. This includes:
    • Providing correct information on your VAT returns, activity statements and any other required documentation
    • Providing the full facts and circumstances when you seek our advice
    • Answering questions completely and accurately​

     
    Know what your representative does on your behalf

    If you choose to have a representative, we ask that you make sure you are aware of your representative’s activities including the information and VAT payments they provide to us. You are also responsible for making sure that your representative provides this information and VAT payments within the time limits specified in law.​

     
    Be cooperative

    We appreciate you working with us in a supportive manner while dealing with GAZT staff.​

     
    Take reasonable care to avoid mistakes and notify us promptly in case of any mistakes

    We ask you to take reasonable care to avoid mistakes when providing information, filing VAT returns or claiming VAT refunds. Where you identify any mistakes made, we expect that you inform us immediately. We will work with you to remedy the situation.​

     
    Submit your VAT returns and VAT payments on time

    We expect that you submit your VAT return and any applicable VAT payments within the timeframe set out in law.​

     
    Keep accurate records and protect your information

    You, or your representative should keep accurate records that support what you tell or submit to GAZT. You should not share any confidential information with others, other than your designated tax representative and inform us immediately should you think that someone else knows your GAZT portal identification details.​ 

    Preparing your business

    Large businesses

    Large businesses

    As a large business, you have already been engaged by the General Authority of Zakat and Tax (GAZT) via a VAT Relationship Manager or a VAT contact centre agent.
    Small and medium enterprises

    Small and medium enterprises

    As a small or medium business, you have a variety of ways to find out about your VAT readiness status. The General Authority of Zakat and Tax is committed to supporting you during this proces.
    VAT service providers

    VAT service providers

    GAZT has engaged with a set of PoS and accounting software providers. These solutions will support SMEs in implementing VAT.

    We do our best, to keep you informed and prepared for VAT in your organisation.

    Is there something we should add?

Need help in handling the VAT tax?

To be compliant with VAT requirements, all businesses will need to make adjustments to their:

  • Record keeping
  • Accounting systems
  • Financial reporting

Therefore The General Authority of Zakat and Tax
(GAZT) has taken actions to ensure that all.
entities are prepared for VAT implementation by organizing rounds of conferences on VAT and educating accountant bodies.