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VAT Registration in Saudi Arabia

VAT Registration in Saudi Arabia

The Value Added Tax (VAT) in Saudi Arabia represents an indirect tax which is levied on all goods and services acquired and sold by a legal entity, with several exceptions. Since the 1st of January, 2018, Saudi Arabia imposed this tax here. 

The VAT standard rate in this country was set at 5%. In this article, our company formation consultants in Saudi Arabia make a brief overview of the VAT in this country.

VAT applicability in Saudi Arabia in 2022

The value added tax in Saudi Arabia in 2022  is a consumption tax applied to all goods and services provided in the city-state. It also applies to imported goods. The VAT is considered an indirect tax because it is paid by the final consumer and it is not levied on the company that produces or distributes the product or supplies the service. 

At the level of 2022, foreign company owners who want to register for VAT in Saudi Arabia can rely on our accountants.

Details on the VAT in Saudi Arabia

As mentioned earlier by our company registration advisors in Saudi Arabia, there are certain goods and services which pay a 0% VAT rate in this country in 2022. These are:

  • Exports of products and services outside the Council Territory, when backed by proof of the movement of these products or services;
  • Supplies with customs duty suspension areas;
  • Exports of services when the client is not a resident of the Council Territory and/or the consumption does not occur within the Territory;
  • International transport services of goods and individuals;
  • Medical equipment and medicines;
  • Investments in precious metals.

Also, there are certain supplies which are exempt from VAT in Saudi Arabia in 2022, therefore do not have the right for reclaiming of the input VAT reclaims. These are:

  • The issuance or transfer of money or security on a monthly basis;
  • Credit;
  • Operations of current, deposit and savings accounts;
  • Financial instruments;
  • Islamic finance products, which are Shari’ah compliant;
  • Interests on loans, debt security or credit;
  • Life insurance;
  • Other services: our Saudi Arabia company formation agents can provide more details on what these other services consist of. We can also advise you on how to open a company in Saudi Arabia.

VAT regulations in Saudi Arabia in 2022

A member of the Shoura Council, Mr. Mohammed Al-Khunaizi, recently declared that the introduction of the VAT in Saudi Arabia would help to raise the tax revenues for the local authorities to use for infrastructure and development.

Mr. Al-Khunaizi continued saying that there would be punitive measures taken strictly for those who had not registered so far or who do not abide by the laws. Our team can help you comply with the accounting and reporting requirements.

If you have further questions about the Saudi Arabian VAT rates for 2022, or for assistance in setting up a company in Saudi Arabia, please get in touch with our friendly staff.