Saudi VAT & Zakat 2026: Rules Businesses Must Know

Businesses operating in Saudi Arabia — both local and foreign — face a clear set of Value Added Tax obligations in 2026, covering rates, registration, invoicing and filing. The standard VAT rate remains 15% on most goods and services supplied within the Kingdom.

Some supplies are treated differently. Zero-rated categories include exports of goods, exports of services to non-residents, qualifying medicines and medical equipment, qualifying investment metals (gold, silver and platinum at 99% purity or higher), and international transport. Exempt supplies include qualifying margin-based financial services, residential property sales and leases, and specific education and healthcare activities.

Registration thresholds

Resident businesses must register for VAT once taxable supplies reach SAR 375,000 over the past 12 months or expected in the next 12. Voluntary registration is available at SAR 187,500 of taxable supplies or expenses. Non-resident businesses must register from their first taxable supply where no resident customer applies the reverse-charge mechanism, and they must appoint a Saudi-based tax representative.

Invoicing and e-invoicing

Registered persons must issue tax invoices in Arabic showing the total price including VAT, and electronic invoices must comply with Fatoora requirements. Phase 2 (integration) continues in rolling waves during 2026: Wave 23, covering taxpayers with turnover of SAR 750,000 or more, has a deadline of 31 March 2026, while Wave 24, for turnover of SAR 375,000 or more, is due by 30 June 2026.

Filing, deadlines and penalties

Returns are filed monthly for taxpayers with annual taxable turnover above SAR 40 million, and quarterly for others. Payment and returns are due by the last day of the month following the tax period. Late filing or payment penalties generally range from 5% to 25% of the tax amount, with additional surcharges for evasion. The VAT law and its implementing regulations were amended by ZATCA Board Resolution No. 01-06-24, published in the Official Gazette on 18 April 2025, with most changes effective from that date. Staying compliant helps businesses avoid penalties and keep operations running smoothly.

---

Stay updated with the latest news, events, sports updates, business insights, real estate and lifestyle stories on Saudi Living — the leading online platform for residents, expats, and visitors in Saudi Arabia.

Follow Saudi Living for daily updates:

• Instagram - @saudiliving
• X - @saudiliving
• Facebook - @saudiliving
• YouTube - @saudiliving