Business owners and start-ups across Saudi Arabia need to keep a close eye on their turnover, as value-added tax (VAT) registration remains mandatory once taxable supplies cross a set threshold. The standard VAT rate stays at 15% in 2026, with no announced change, and registration and compliance continue to be managed by the Zakat, Tax and Customs Authority (ZATCA).
For resident businesses, VAT registration becomes mandatory when taxable supplies exceed SAR 375,000 over any rolling 12-month period, or when a business reasonably expects to cross that level in the coming 12 months. Once the threshold is crossed, the business has just 30 days to submit a registration application through the ZATCA electronic portal. Missing that window carries a fine of SAR 10,000 for late registration.
Smaller and growing companies with taxable supplies or expenses between SAR 187,500 and SAR 375,000 in a 12-month period can choose voluntary registration. This option can benefit start-ups, since it allows them to reclaim input VAT on setup and operating costs. Resident businesses below SAR 187,500 in annual taxable supplies are not eligible to register.
The rules differ for non-resident businesses making taxable supplies in the Kingdom: they must register from their very first taxable supply, with no turnover threshold at all.
Why it matters
New businesses expecting to exceed SAR 375,000 in their first 12 months should register before, or as soon as they reasonably expect, to cross that level under the same 30-day rule. Both standard-rated and zero-rated taxable supplies count toward the threshold, while exempt supplies do not. All registration, return filing, payments, and account management are handled through the ZATCA portal — not through Absher, Muqeem, Qiwa, Najiz, Nafath, or Tawakkalna. Staying on top of these limits helps owners avoid penalties and keep their operations compliant.
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