VAT
ضريبة القيمة المضافة
Definition
Value Added Tax (VAT) is a 15% consumption tax applied to most goods and services in Saudi Arabia, administered by ZATCA. Businesses with annual revenue exceeding SAR 375,000 must register for VAT, charge it on sales, and file periodic returns.
Why VAT Matters in Saudi Arabia
VAT is a critical component of Saudi Arabia's fiscal framework managed by ZATCA. With the introduction of 15% VAT in 2020, enhanced e-invoicing requirements (Fatoorah), and ongoing Zakat compliance, businesses must understand these financial concepts to remain compliant. Proper knowledge of this term helps optimize tax planning and avoid penalties that can significantly impact your bottom line.
VAT Key Facts
- Rate: 15% (increased from 5% in July 2020)
- Mandatory registration: Revenue > SAR 375,000
- Voluntary registration: Revenue > SAR 187,500
- Filing: Monthly (revenue > SAR 40M) or quarterly
- Exempt: Real estate rentals, certain financial services, healthcare, education
Use our VAT Calculator to compute inclusive/exclusive VAT amounts.
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