Saudi VAT and Zakat Rules Updated for Companies

Companies operating in Saudi Arabia — both local and foreign — face updated value-added tax (VAT) and Zakat obligations, including strengthened e-invoicing requirements and tighter compliance enforcement. The standard VAT rate remains 15% on most goods and services, while zero-rated and exempt categories stay as defined in the VAT law and its regulations.

For local companies, VAT registration becomes mandatory once annual taxable supplies reach SAR 375,000 within a 12-month period. A voluntary registration band applies between SAR 187,500 and SAR 375,000, while businesses below SAR 187,500 are not required to register. Companies that cross the mandatory threshold must apply within 30 days, and failing to register on time carries a fixed fine of SAR 10,000.

Foreign and non-resident businesses face stricter rules. Those required to account for VAT on Saudi-sourced supplies must register from their first taxable transaction, with no turnover threshold. Non-resident suppliers of digital services to consumers in the Kingdom must register upon their first B2C sale, and those supplying non-taxable customers must register within 30 days of the first supply. Non-residents are also required to appoint a tax representative inside Saudi Arabia.

Marketplaces treated as deemed suppliers

Recent amendments to the VAT implementing regulations, taking effect across 2025–2026, strengthen the rules for electronic marketplaces and platform operators. Platforms that act as intermediaries for non-resident digital suppliers are now treated as "deemed suppliers," meaning they must charge, collect, file, and pay VAT on transactions they facilitate in the Kingdom, and keep proper records.

On filing, monthly VAT returns are required for companies with annual taxable supplies above SAR 40 million, while others file quarterly. Returns are due by the last day of the month following the tax period and must be submitted electronically through the ZATCA portal — including nil returns when there is no activity. The changes matter to residents and business owners alike, as they affect pricing, digital purchases, and the compliance burden on companies serving the Saudi market.

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