VAT & Zakat Compliance in Saudi Arabia: 2026 Rules

Businesses operating in Saudi Arabia must continue meeting Value Added Tax (VAT) and Zakat compliance requirements administered by the Zakat, Tax and Customs Authority (ZATCA), the competent body for VAT, Zakat and corporate income tax. All registration, filing, payment and refund services run through the ZATCA electronic portal, with secure login handled via unified national access using نفاذ.

The standard VAT rate remains 15% on most goods and services, unchanged since 1 July 2020. Some supplies are zero-rated — including exports to non-residents, qualifying medicines and medical equipment, qualifying investment metals such as high-purity gold, silver and platinum, and international transport. Other supplies are exempt, including margin-based financial services, residential property sales and leases, and certain qualifying education and healthcare services.

Registration thresholds

Resident businesses with annual taxable supplies above SAR 375,000 must register for VAT, and are required to submit an application within 30 days of reaching the threshold. Voluntary registration is available for businesses with taxable supplies between SAR 187,500 and SAR 375,000, while those below SAR 187,500 are not required to register. To apply, businesses access the ZATCA portal, prepare their Commercial Registration, IBAN and last 12 months of financial statements, and enter their activity details, projected sales and taxable supplies. A VAT certificate and Tax Identification Number (TIN) are issued electronically upon approval.

E-invoicing obligations

All resident VAT-registered businesses must issue electronic invoices. Phase 1 (generation) has been mandatory since 4 December 2021, while Phase 2 (integration) requires near-real-time connection with ZATCA's Fatoora platform. Standard B2B and B2G invoices must be issued in structured XML with a UUID, digital signature and QR code, and cleared in real time. Simplified B2C invoices require a QR code and must be reported to ZATCA within 24 hours of issuance.

For the Kingdom's businesses and the many expat entrepreneurs among them, staying compliant is essential to avoid penalties and keep operations running smoothly under a unified digital tax system.

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