Everything You Need to Know About VAT Registration in Saudi Arabia

Setting up a business in Dubai can be a smart move as it is the largest free-market economy among Arab states, which is not just limited to petroleum industries. Besides, the procedures for business setup in the Kingdom of Saudi Arabia (KSA) aren’t extravagant for foreign investors. However, operating a business also means that the business owners need to be familiar with VAT registration in Saudi Arabia.

VAT registration is a legal requirement in KSA. However, there are concerns among people about how it works, what is the eligibility criteria, and what steps they need to take in order to stay on the right side of the law. This guide will answer all your queries and make it easier for you to proceed with VAT registration in KSA.

VAT in Saudi Arabia

All goods and services that are bought, sold, or imported to KSA are subject to 15% VAT, short for Value Added Tax. The list includes the following goods and services:-

• Food and beverages
• Local transportation
• Private healthcare
• Educational services
• Health insurance and other types of insurance (except life insurance)

Additionally, certain supplies are categorized as zero-rated in Saudi Arabia, such as –

• International transportation of passengers or goods
• Services offered to non-GCC residents
• Exports to non-GCC residents or areas outside the Council Territory
• Medicines and medical devices spelled out by the Ministry of Health and the Food and Drug Authority in Saudi
• Pure gold, silver, or platinum supplies held for investment purposes

VAT registration in Saudi Arabia

The authorities of Saudi Arabia have defined certain thresholds for VAT registration based on the annual value of products and services supplied. The classification of VAT registration in KSA is as follows:-

Mandatory VAT Registration – Businesses that have a taxable supply value exceeding SAR 375,000 over the past 12 months or are projected to exceed over the coming 12 months must register under the Saudi VAT system. Non-resident businesses operating in Saudi are also required to register for VAT, regardless of the specified thresholds. Nevertheless, they need to appoint a tax representative approved by ZATCA (Zakat, Tax, and Customs Authority) to assist with the procedure.

Voluntary VAT Registration – Businesses that have a taxable supply value between SAR 187,500 and 375,000 are required to register for VAT voluntarily. It provides them significant financial benefits such as reclamation of input tax.

Additionally, businesses that are exclusively engaged in zero-rated supplies are also allowed to register voluntarily.

Documents required for VAT registration in Saudi Arabia

• Business details, including identification details of the concerned individual
• Business address, such as email and other contact details
• Electronic identification number provided by the tax authorities (if any)
• Commercial Registration number
• Date of VAT registration
• The annual value of taxable products

Process of VAT registration in Saudi Arabia

The VAT registration process in KSA is not that complicated. It includes just a few simple steps:-

• Register for a Tax Identification Number (TIN) – The first step to VAT registration in Saudi Arabia is to get a Tax Identification Number. The taxpayer can obtain it from the ZATCA website by filling in all the required details in the form available on the portal. Once all the details are successfully submitted, TIN is issued to the business so that they can complete the VAT registration process.
• Access ZATCA website – After receiving the TIN, the taxpayer can start the registration process by authenticating the login using the login code sent to them by the authorities.
• Input details in the VAT registration form – To register for VAT, the taxpayers need to furnish their business details and upload relevant documents as required. After submitting the details, a form will be displayed with some mandatory sections that need to be filled in correctly.

VAT registration in KSA: Details Required

The VAT registration form contains five parts –

Instructions and conditions –

The first page will display the instructions and conditions on how to proceed. The taxpayer needs to click on ‘I Agree with these conditions’ and proceed.

Taxpayer’s details –

Next, they must provide certain details like:

• The IBAN (International Bank Account Number) associated with the VAT account of the company
• The date on which the company became eligible for VAT
• Information regarding importing or exporting goods/services by the company
• TIN (Tax Identification Number), CR (Commercial Registration number), and address of the company

If the company has pre-existing records on the ZATCA website, certain details will be auto-filled.

Financial details

Based on the company’s VAT eligibility, the taxpayer needs to fill in the following details in this section:

• Estimated taxable sales for the next year
• Actual taxable sales for the previous year
• Estimated taxable expenses for the next year
• Actual taxable expenses for the previous year

Financial representative details

This section is to be filled only by non-residents. They need to provide details about their designated tax representative in Saudi. For instance,

• TIN
• ID number
• Contact number and Email

Declaration –

Once the taxpayer has confirmed the accuracy of the submitted information, they can submit their application after acknowledgment.

Upon successful submission, the authorities will review the registration form, approve the request accordingly, and issue the VAT registration certificate.

VAT Registration in Saudi Arabia: Special Cases

VAT registration is also required in specifically mentioned cases such as –

Non-residents – Non-residents making taxable supplies to or buying goods or services from non-registered people in KSA are required to register for VAT within 30 days of the first transaction. However, they are required to appoint a tax representative, approved by ZATCA, to apply for VAT registration, pay due tax, collect VAT from customers, and make necessary transactions on behalf of the non-resident.

Group registration – A VAT group refers to an amalgamation of legal persons who are residents of Saudi Arabia. If one or more taxable persons hold more than 50% stake, they can apply to ZATCA as a single VAT group. Nevertheless, there are certain conditions that they need to meet:

• Every member of the group has to participate in the economic activity
• There must be a common control among the group where a member, be it an individual or an organization, holds 50% or more shares in all group members. The common owner could be a third party who is not a member of the group.
• At least one member in the group must have taxable supplies more than the specified registration threshold.

The TIN is issued to the group by ZATCA.

Multiple commercial registrations – If an entity has multiple branches or fixed establishments in Saudi or outside Saudi, then they will be issued only one VAT registration number, wherein the main branch will be considered for VAT registration in Saudi Arabia. Similarly, if the organization has multiple establishments in more than one country, the VAT transactions will happen in the most closely associated country. The inter-branch transfers or charges will not be counted in KSA VAT.

Choose the right solution for your VAT concerns

At Shuraa Tax, they make dealing with VAT obligations easier for you. Their team is equipped with the best talents who help clients with VAT registration in Saudi Arabia and guide them through the entire process. They will gather the right documents, fill out the forms, and submit them to the appropriate authorities within the specified time frame.

Furthermore, they will also help prepare and submit VAT returns effectively and in compliance with the rules and regulations. No matter if you are a small business or a large corporation, Shuraa Tax will assist you the way you need.