What is VAT in Saudi Arabia?
Value Added Tax is a general tax on the supply of goods and services in the Kingdom. The standard rate is 15%. It is charged by registered businesses at every stage of the supply chain, and the final consumer carries the cost. Businesses act as collectors. They charge VAT on sales, deduct the VAT paid on their own business costs and pay the balance to the Zakat, Tax and Customs Authority (ZATCA).
For an ordinary shopper in Riyadh, Jeddah or Dammam, the tax is already inside the price tag, because consumer prices must be shown including VAT. For a business owner, a freelancer or an accountant, VAT means daily maths. You add 15% to a quotation. You find the VAT inside a supplier bill. You check that a receipt is right before you claim it back. This calculator handles both directions and lets you include a quantity.
Who must register for VAT with ZATCA?
Everybody pays VAT as part of the prices they pay. Only businesses that meet the rules must register, collect and report it. The thresholds are:
| Situation | Rule |
|---|---|
| Mandatory registration (resident business) | Taxable supplies in the last 12 months are more than SAR 375,000, or are expected to pass SAR 375,000 in the next 12 months |
| Voluntary registration | Taxable supplies or taxable expenses are more than SAR 187,500 but not above SAR 375,000 |
| Below SAR 187,500 | Registration is generally not allowed |
| Non-resident supplier | No threshold; must register if it makes taxable supplies in the Kingdom and no customer accounts for the VAT under the reverse charge |
Once you cross the mandatory threshold, you have 30 days to apply. Registration is done online through the ZATCA portal. After registration you get a 15-digit VAT number, which must appear on your tax invoices.
How often do you file?
Businesses with annual taxable supplies above SAR 40 million file monthly. Others usually file every quarter, although they can choose monthly filing. The return and payment are due by the last day of the month after the end of the tax period. So the return for January to March is due by 30 April.
Legal basis and history of Saudi VAT
Saudi Arabia introduced VAT on 1 January 2018 at 5%. The legal framework is the Unified VAT Agreement for the GCC States and the national VAT Law, issued by Royal Decree No. M/113. The detailed rules are in the VAT Implementing Regulations issued by the tax authority.
In May 2020, as part of measures to deal with the fall in oil revenue and the COVID-19 crisis, the government announced that the rate would triple. From 1 July 2020 the standard rate became 15%. It has stayed at 15% since then.
The tax authority was known as GAZT until 2021, when it merged with Saudi Customs to form ZATCA. ZATCA now runs VAT, zakat, income tax, excise tax, customs duties and the Real Estate Transaction Tax.
Recent changes to the regulations
ZATCA's board amended the VAT Implementing Regulations in April 2025. The changes covered VAT groups, transfers of a business as a going concern, the zero-rating of goods under customs suspension and special economic zones, the treatment of online marketplaces, new blocked categories of input tax for events and hospitality, and a formal legal base for the tourist refund scheme. Most of these took effect on publication, and one rule on online marketplaces started on 1 January 2026. The 15% rate did not change.
How to calculate 15% VAT in Saudi Arabia
There are two directions. The calculator follows exactly these steps, using the rate in the rate box.
From net to gross (adding VAT)
Gross amount = Net amount × 1.15
From gross to net (removing VAT)
Net amount = Gross amount ÷ 1.15
A quick rule: the VAT inside any standard-rated Saudi price is 3/23 of the total, or about 13.04%. It is never 15% of the gross price.
With a quantity
Apply the formula above to the line value
The tool works out the line value first, rounds it to two decimals and then applies VAT once to the whole line. The VAT is rounded to the nearest halala, and the third figure is found by adding or subtracting. This keeps net plus VAT exactly equal to gross.
Worked examples
Type these figures into the calculator above to see the same results.
Example 1: A freelancer's invoice
Ahmed is a VAT-registered IT consultant in Riyadh. He charges SAR 1,000 for a day of work, before VAT.
- VAT: 1,000 × 15% = SAR 150.00
- Invoice total: SAR 1,150.00
Example 2: VAT inside a supplier bill
A restaurant pays SAR 2,300 for kitchen equipment. The price includes VAT. The owner wants to know the input tax.
- VAT: 2,300 × 15 ÷ 115 = SAR 300.00
- Net amount: 2,300 − 300 = SAR 2,000.00
A common error is to take 15% of SAR 2,300, which gives SAR 345. That overstates the input tax by SAR 45.
Example 3: Wholesale order with quantity
A distributor sells 40 cases of bottled water at SAR 18.50 a case, before VAT.
- Line value: 18.50 × 40 = SAR 740.00
- VAT: 740 × 15% = SAR 111.00
- Total: SAR 851.00
Example 4: Shelf price with rounding
A pair of shoes is priced at SAR 249 including VAT.
- VAT: 249 × 15 ÷ 115 = 32.478, rounded to SAR 32.48
- Net amount: 249 − 32.48 = SAR 216.52
Zero-rated and exempt supplies in Saudi Arabia
Most goods and services are taxed at 15%. Some are zero-rated, which means VAT is charged at 0% and the supplier can still reclaim input tax. Others are exempt, which means no VAT is charged and the supplier usually cannot reclaim the VAT on related costs.
| Category | Rate | Examples |
|---|---|---|
| Standard-rated | 15% | Most goods, food, clothing, electronics, restaurants, hotels, commercial rent, professional services, telecoms |
| Zero-rated | 0% | Exports of goods outside the GCC; services to non-GCC residents consumed abroad; international transport of goods and passengers; qualifying medicines and medical goods; investment gold, silver and platinum of 99% purity or more |
| Exempt | None | Margin-based financial services, such as interest and certain life insurance; rent of qualifying residential property; supplies of real estate (subject to RETT instead) |
Each zero-rating has conditions. For example, exported goods must leave the Kingdom within a set time and you must keep proof of export. Read the ZATCA guideline for your sector before you treat a sale as zero-rated.
Private healthcare and education for citizens
When VAT started, the state agreed to bear the VAT on private healthcare and private education given to Saudi citizens. The supplier charges VAT in the normal way but recovers it from the state, so the citizen does not carry it. Expats pay the full 15% on the same services. Conditions apply, so confirm the current rules with the provider or with ZATCA.
FATOORA: Saudi e-invoicing phases
FATOORA is ZATCA's e-invoicing project. It means paper and hand-written invoices are no longer allowed for VAT-registered businesses. It runs in two phases.
Phase 1: Generation (from 4 December 2021)
All resident VAT-registered businesses must issue and store tax invoices and notes electronically, using a compliant solution. Standard tax invoices for business customers and simplified invoices for consumers must carry a QR code. Editing an invoice after it is issued, without a trace, is not allowed.
Phase 2: Integration (from 1 January 2023, in waves)
In this phase your invoicing system must connect to ZATCA's FATOORA platform. Standard invoices are cleared by ZATCA before you send them to the buyer. Simplified invoices are reported within 24 hours. ZATCA selects businesses in waves, starting with the largest by turnover, and gives each wave at least six months' notice.
| Wave | Taxable turnover above | Integration period |
|---|---|---|
| 23rd | SAR 750,000 (in 2022, 2023 or 2024) | 1 January 2026 to 31 March 2026 |
| 24th | SAR 375,000 (in 2022, 2023 or 2024) | 1 April 2026 to 30 June 2026 |
| 25th | SAR 187,500 (in 2022, 2023, 2024 or 2025) | From 1 February 2027 |
With the 25th wave, Phase 2 reaches businesses at the voluntary registration level. ZATCA notifies each selected business directly. If you have not received a notice, check your status on the ZATCA portal.
Real estate: 5% RETT instead of VAT
Since 4 October 2020, most sales of land and buildings in Saudi Arabia are exempt from VAT. In their place, the Real Estate Transaction Tax (RETT) applies at 5% of the value of the property. This was set by Royal Order No. A/84.
- What it covers. Sales and other disposals of land and buildings, whether residential, commercial or agricultural. Some long leases and transfers of shares in property companies can also be caught.
- Who pays. The seller must pay ZATCA. If the tax is not paid, the seller and the buyer are jointly responsible. In practice the price negotiation often decides who bears it.
- First home. For a Saudi citizen buying a first home, the state bears the RETT on the first SAR 1 million of value.
- Exemptions. These include inheritance divisions, gifts to close relatives, endowments, some government transactions and using property as loan security.
- Late payment. 5% of the unpaid RETT for each month or part of a month.
RETT is not VAT, so you cannot reclaim it as input tax. To estimate it, multiply the property value by 5%. For a SAR 800,000 apartment that is SAR 40,000. You can also enter SAR 800,000 into the calculator with the rate set to 5. Services linked to property, such as brokerage fees or building works, are still taxed at 15% VAT.
Special cases
Tourist VAT refund
Saudi Arabia launched a tourist VAT refund scheme in 2025. Visitors aged 18 and over who are not residents can claim back VAT on eligible goods bought from participating shops, if they take the goods out of the Kingdom within 90 days. Refunds are processed at verification points at major international airports. Services, meals, hotel stays, vehicles, food and tobacco are excluded. Check the latest minimum spend and fees at the refund counter.
Imports
VAT at 15% is due on most goods imported into the Kingdom and is usually collected at customs together with any duty. Registered businesses can normally reclaim it through the return.
Imported services and the reverse charge
When a Saudi registered business buys services from a supplier abroad, it accounts for the VAT itself. It reports the output tax and, if the cost is for taxable business use, deducts the same amount as input tax in the same return.
Blocked input tax
Some costs never allow a VAT deduction, even for a registered business. They include entertainment, many passenger cars and, since the 2025 amendments, some events and hospitality services. Check before you claim.
Salaries and government fees
Salaries are outside the scope of VAT. So are most government fees, such as the expat levy and iqama fees. To estimate those costs, see our Saudi Expat Levy Calculator. For social insurance on wages, see our Saudi GOSI Calculator.
Saudi VAT penalties
ZATCA publishes a schedule of fines under the VAT Law. The main ones are:
| Violation | Fine |
|---|---|
| Failing to register on time | SAR 10,000 |
| Late filing of a return | 5% to 25% of the tax that should have been declared |
| Late payment | 5% of the unpaid tax for each month or part of a month |
| Incorrect return that lowers the tax due | 50% of the difference |
| Issuing a tax invoice when not registered | Up to SAR 100,000 |
| Not keeping invoices, books and records | Up to SAR 50,000 |
| Tax evasion | At least the tax due, and up to three times the value of the goods or services |
A repeat of the same breach within three years can double the fine. E-invoicing breaches have their own schedule, which starts with warnings and then fines.
Penalty amnesty to 31 December 2026
ZATCA has extended its "cancellation of fines" initiative several times. The current round runs from 1 July 2026 to 31 December 2026. It can waive fines for late registration, late payment, late filing and VAT return corrections. You must be registered, file all missing returns and pay the original tax, though an instalment plan can be requested. It does not cover tax evasion fines or returns due after 30 June 2026.
Common mistakes when calculating Saudi VAT
- Taking 15% off a gross price. Divide by 1.15 instead. The VAT inside a gross price is about 13.04%.
- Using the old 5% rate. Some older contracts and templates still show 5%. The rate has been 15% since July 2020.
- Charging VAT on a property sale. Most property sales are VAT-exempt and carry 5% RETT instead.
- Treating exempt as zero-rated. Only zero-rated sellers can reclaim input VAT.
- Missing the 30-day deadline. Late registration costs SAR 10,000, so watch your rolling 12-month total.
- Invoices without QR codes or not cleared. Under FATOORA, a non-compliant invoice can cause penalties and problems for your buyer's input tax claim.
Practical tips and official help
- Always state on quotes whether prices are "excluding VAT" or "including VAT".
- Check a supplier's VAT number on the ZATCA website before you pay a large invoice with VAT.
- Keep your records for at least six years, and longer for real estate and capital assets.
- If you also operate in the UAE, remember the rate there is 5%. Use our UAE VAT Calculator for those invoices.
- Planning a big purchase on finance? VAT is part of the price you borrow. See our Saudi Personal Loan Calculator.
Official help: ZATCA's website (zatca.gov.sa) has guidelines, the e-invoicing portal and the registration service. You can call ZATCA on 19993, which runs 24 hours a day, or use its live chat and social media channels.
Frequently asked questions
What is the VAT rate in Saudi Arabia in 2026?
The standard rate is 15%. It has applied since 1 July 2020, when it rose from 5%. Some supplies are zero-rated and some are exempt.
How do I add 15% VAT to a price?
Multiply the net price by 1.15. For SAR 1,000 the VAT is SAR 150 and the total is SAR 1,150.
How do I calculate VAT from a total amount in Saudi Arabia?
Multiply the VAT-inclusive total by 15 and divide by 115. For SAR 2,300 the VAT is SAR 300 and the net amount is SAR 2,000. You can also divide the total by 1.15 to get the net amount.
Why is the VAT inside a price not 15% of the total?
Because the 15% is charged on the net price. Inside a gross price, VAT is 15/115 of the total, which is about 13.04%. Taking 15% off a gross price removes too much.
What is the VAT registration threshold in Saudi Arabia?
A resident business must register when its annual taxable supplies are more than SAR 375,000. It may register voluntarily if its supplies or taxable expenses are more than SAR 187,500. Non-resident suppliers have no threshold.
What is FATOORA?
FATOORA is ZATCA's e-invoicing system. Phase 1 started on 4 December 2021 and requires invoices to be created electronically. Phase 2, the integration phase, links invoicing systems to ZATCA and is being rolled out in waves based on turnover.
Is VAT charged on buying property in Saudi Arabia?
Sales of real estate are generally exempt from VAT since 4 October 2020. Instead, a 5% Real Estate Transaction Tax applies to the value of the property. Saudi citizens buying a first home may have the tax on the first SAR 1 million paid by the state.
Is house rent subject to VAT in Saudi Arabia?
Rent of qualifying residential property is exempt from VAT. Commercial rent, such as offices and shops, is taxed at 15%.
What is the penalty for late VAT payment in Saudi Arabia?
ZATCA charges 5% of the unpaid tax for each month or part of a month that it stays unpaid. A late return also carries a fine of 5% to 25% of the tax due on that return.
Can I use this calculator for UAE VAT too?
Yes. Change the rate to 5% to get UAE figures, or use our separate UAE VAT calculator, which also explains the UAE rules.
Disclaimer
This calculator and article are general information, not tax advice. The VAT treatment of a supply depends on its facts, and ZATCA can change rules and dates. Before you file or sign a contract, confirm the position with ZATCA or a licensed tax adviser.
Sources and references
Saudi VAT Law (Royal Decree No. M/113) and the VAT Implementing Regulations, as amended by ZATCA Board Resolution No. 01-06-24 (April 2025); Unified VAT Agreement for the GCC States; Royal Order No. A/84 of 2020 on the Real Estate Transaction Tax; ZATCA e-invoicing (FATOORA) rules and wave announcements. Official pages: ZATCA – VAT taxation violation fines; ZATCA – Cancellation of fines initiative to December 2026; EY Tax News – 25th wave of Phase 2 e-invoicing.