VAT & Zakat Rules for Saudi Businesses Explained

Businesses operating in Saudi Arabia must comply with a clear set of Value Added Tax (VAT) and Zakat rules, from registration thresholds to filing deadlines, all handled online through the Zakat, Tax and Customs Authority (ZATCA) electronic portal.

The standard VAT rate is 15% on most taxable supplies of goods and services. Resident businesses must register for VAT once their taxable supplies exceed SAR 375,000 over any rolling 12-month period. Registration is optional for businesses with taxable supplies or expenses between SAR 187,500 and SAR 375,000, while those below SAR 187,500 are not permitted to register. Non-resident businesses making taxable supplies in the Kingdom — including providers of digital services — have no threshold and must register from their first taxable supply.

Companies that cross the mandatory threshold must register within 30 days from the end of the month in which they exceeded SAR 375,000 in taxable turnover. Filing frequency depends on revenue: businesses earning above SAR 40 million file monthly, with returns due by the end of the month following the tax period. Those with revenue from SAR 375,000 up to SAR 40 million file quarterly, with returns due by the end of the month after the quarter.

How to register and file

Registration and filing are done through the ZATCA electronic portal. Entities create or use an existing account, select the VAT registration service, complete the form with business details, tax identification numbers and turnover data, then submit to receive a VAT certificate and registration number. Individuals with business activity log in and choose the "Individuals Registration in VAT" service. VAT-registered businesses must also issue compliant e-invoices integrated with ZATCA systems.

On Zakat, Saudi and GCC-owned entities and natural persons engaged in business are generally subject to Zakat on the Zakat base, while foreign-owned entities are generally subject to income tax, with mixed-ownership entities treated accordingly. Understanding these obligations helps business owners avoid penalties and stay compliant as the Kingdom's tax framework continues to mature.

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