Question 1

What is the current VAT rate in Saudi Arabia?

Accepted Answer

The standard VAT rate in Saudi Arabia is 15%. It was originally introduced at 5% on 1 January 2018 and increased to 15% on 1 July 2020. This rate applies to most goods and services, including e-commerce transactions. Some items such as certain financial services and residential real estate are exempt or zero-rated.

Question 2

Who must register for VAT in Saudi Arabia?

Accepted Answer

Any business with annual taxable revenue exceeding SAR 375,000 must register for VAT with ZATCA. Businesses earning between SAR 187,500 and SAR 375,000 may register voluntarily. E-commerce revenue from all channels — your own website, Salla, Zid, or any marketplace — counts toward the threshold.

Question 3

How do I add VAT to a price?

Accepted Answer

To add 15% VAT to a price, multiply the base price by 1.15. For example, a product costing SAR 200 before VAT becomes SAR 230 after VAT (200 x 1.15 = 230). The VAT component is SAR 30 (200 x 0.15 = 30).

Question 4

How do I remove VAT from a VAT-inclusive price?

Accepted Answer

To find the price before VAT from a VAT-inclusive amount, divide by 1.15. For example, if a product is priced at SAR 345 including VAT, the base price is SAR 300 (345 / 1.15 = 300) and the VAT portion is SAR 45.

Question 5

Is VAT applied to shipping charges?

Accepted Answer

Yes. VAT at the standard 15% rate applies to shipping and delivery fees charged to customers. If you charge SAR 25 for shipping, the VAT-inclusive amount should be SAR 28.75. This must be reflected on the tax invoice as a separate line item or included in the total taxable amount.

Question 6

How often must I file VAT returns and what are the penalties for late filing?

Accepted Answer

Businesses with annual taxable supplies over SAR 40 million must file monthly. Others file quarterly. Returns are due by the end of the month following the tax period. Late filing penalties range from 5% to 25% of the unpaid tax. Non-registration when required can result in a fine of up to SAR 10,000.