Value Added Tax Law

Purpose and scope

• Imposes value added tax on imports and supplies of goods and services, implementing the GCC Unified VAT Agreement (Article 2).
• The standard rate is 15% of the value of the supply or import unless an exemption or zero rate applies (Article 2 as amended); it is administered by the Zakat, Tax and Customs Authority.

Key rules, rights and obligations

• A taxable person must register according to his activities and the value of his supplies; the regulation sets the mandatory and voluntary thresholds (Article 3).
• A tax group may register and is treated as one person; its members are severally and jointly liable for the tax (Article 4).
• The regulation sets exempt and zero-rated supplies (Article 10), input tax deduction conditions (Article 22) and tax invoice contents (Article 23).
• The taxable person files a return for each tax period and pays the net tax within the periods set by the regulation (Articles 24 and 27).
• The Authority may issue an assessment regardless of the return filed (Article 26), and invoices, books and records must be kept for the period set by the regulation (Article 36).

Violations, penalties and common problems

• Tax evasion, such as false documents or returns or concealing supplies: a fine of no less than the tax due and up to three times the value of the goods or services concerned (Articles 39 and 40).
• Failing to register within the set period: a fine of SAR 10,000 (Article 41).
• An incorrect return resulting in less tax: a fine of 50% of the difference, which the Authority may waive or reduce under rules (Article 42).
• Late payment: a fine of 5% of the unpaid tax for each month or part of a month (Article 43).
• A non-registered person issuing a tax invoice: a fine of up to SAR 100,000 (Article 44); failing to keep invoices and records or obstructing officers: up to SAR 50,000 (Article 45).
• Fines may be doubled for a repeat within three years (Article 47), and paying a fine does not remove the tax due (Article 46).

Procedures and key deadlines

• Decisions of the Authority are challenged under the rules of the tax violations and disputes committees (Article 49 as amended).
• Registration, returns and payment are done online on the Zakat, Tax and Customs Authority portal.
• Check that contracts and advertised prices include VAT, and issue invoices that meet e-invoicing requirements.

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.