Value Added Tax (or VAT) is an indirect tax imposed on all goods and services that are bought ‎and sold by businesses, with a few exceptions. VAT is applied in more than 160 countries ‎around the world as a reliable source of revenue for state budgets.‎


VAT is imposed at each stage of the supply chain from the production and distribution to the ‎final sale of the good or service.
The consumer pays the VAT cost on purchased goods and services. Businesses pay the ‎government the VAT collected from their customers’ purchases and refund the VAT they paid ‎to their suppliers.‎


In June 2016, the GCC countries agreed to impose VAT across the GCC region. In February ‎‎2017 (Jumada Al-Awwal 1438), Saudi Arabia ratified the GCC VAT framework and ‎committed to impose VAT with effect from January 1, 2018 (Rabi Al-Thani 14, 1439). VAT ‎will be introduced at a standard rate of 5%.‎


The General Authority of Zakat and Tax (GAZT) is responsible for managing the ‎implementation, administration and enforcement of VAT in Saudi Arabia. It does so in close ‎coordination with other relevant entities.‎


The Law and Implementing Regulations outlined in this section articulate and define the ‎rules and procedures regulating the implementation of VAT and the legal parameters of the ‎words, articles and statements pertaining to VAT Law and VAT Implementing Regulations.‎
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The Unified Agreement for Value Added Tax (VAT) of the Cooperation Council for the ‎Arab States of the GulfThe Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf ‎was published by UM AL-QURA in its issue number 4667 dated H1438/7/24. This ‎agreement is to set forth the unified legal framework to introduce VAT in the GCC states, ‎which will be imposed on the supply of goods & services. The Kingdom's approval of the ‎agreement was issued by Royal Decree (number m/51 dated H3/5/1438).‎
In order to access the Unified Agreement for VAT of the Cooperation Council for the Arab ‎States of the Gulf, please follow this link.

This Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf ‎must be transposed into domestic legislation across the GCC Member States, as such KSA VAT ‎Law and draft Implementing Regulations have been developed. 

 

VAT Law:  


The VAT Law defines the introduction of VAT outlined in the Unified Agreement for VAT of ‎the Cooperation Council for the Arab States of the Gulf, it will be applied on 1st January 2018 ‎‎(H1439/4/14).‎
The VAT Law was officially approved and published on H1438/11/4.‎
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In order to access the VAT Law, please follow the link .

 

VAT Implementing Regulations:  


The VAT Implementing Regulations expand on the areas covered within the KSA VAT Law, ‎detailing rules for implementation and giving taxpayers sufficient information to complete ‎their VAT compliance requirements. The Implementing Regulations cover:‎

  • Definitions
  • Taxable Persons
  • Supplies of Goods and services
  • Place of Supply
  • Exempt Supplies
  • Zero-rated Supplies
  • Value of Taxable Supplies
  • Imports
  • Calculation of Tax payable
  • Procedure and administration
  • Refunds of Tax
  • General provisions

The VAT Implementing Regulations were officially approved on H1438/12/4. In order to ‎access the VAT Implementing Regulations, please follow the link.