VAT Registration in Saudi Arabia: Thresholds, Filing & Invoices

This article is general guidance, not legal or tax advice. VAT rules and procedures can change, so always confirm the current requirements with the Zakat, Tax and Customs Authority (ZATCA) or a licensed tax adviser.

VAT in KSA at a glance

Value Added Tax (VAT) is a tax on the consumption of goods and services. In Saudi Arabia it is administered by ZATCA. The standard rate has been 15% since 1 July 2020. Some supplies are zero-rated (for example, certain exports) and some are exempt (for example, certain financial services and residential rent), so the rate that applies depends on what you sell.

A VAT-registered business collects output VAT on its sales, recovers the input VAT it paid on business purchases, and pays the difference to ZATCA through a periodic VAT return. To do this properly you need three things: a valid registration, correct tax invoices, and complete records.

Who must register for VAT in Saudi Arabia

Registration depends on the value of your taxable supplies, which includes standard-rated and zero-rated sales made in the Kingdom.

Mandatory registration

A resident business must register when the value of its taxable supplies in the previous 12 months exceeds SAR 375,000, or when it expects them to exceed SAR 375,000 in the next 12 months. The test is a rolling one: check your trailing 12-month sales at the end of every month, not only at year end. Once the obligation arises, the application must be submitted within the deadline ZATCA sets (commonly cited as 30 days from the end of the month in which the threshold was crossed).

Voluntary registration

A business whose taxable supplies or taxable expenses exceed SAR 187,500 in 12 months (but not the mandatory threshold) may choose to register. Voluntary registration lets you recover input VAT on purchases and can make you look more established to B2B customers, but it also brings the full filing and invoicing obligations.

Non-residents

Non-resident businesses that make taxable supplies in the Kingdom and are required to pay the tax generally have to register regardless of turnover. Check ZATCA's guidance for your exact situation.

Annual taxable supplies	Registration status
Above SAR 375,000	Mandatory
Above SAR 187,500 up to SAR 375,000	Voluntary (optional)
SAR 187,500 or less	Not eligible to register (resident businesses)

Registration is completed online through the ZATCA portal using your Commercial Registration details. After approval you receive a 15-digit VAT number, which must appear on your tax invoices.

VAT return filing: monthly or quarterly

Your tax period depends on your annual taxable supplies:

• Monthly returns for businesses with annual taxable supplies above SAR 40 million.
• Quarterly returns for businesses at or below that level. A quarterly filer may also apply to file monthly.

The return and the payment are due by the last day of the month following the end of the tax period. For example, a return for the quarter January to March is due by 30 April, and a monthly return for October is due by 30 November. ZATCA publishes reminders before each deadline, and late filing or late payment attracts penalties, so build these dates into your calendar.

Worked example: a quarterly return

A Riyadh retailer files quarterly. In one quarter it sells goods worth SAR 300,000 before VAT and buys stock and services worth SAR 120,000 before VAT, all standard-rated.

Item	Value before VAT (SAR)	VAT at 15% (SAR)
Sales (output VAT)	300,000	45,000
Purchases (input VAT)	120,000	18,000
Net VAT payable	-	27,000

The retailer pays SAR 27,000 (45,000 - 18,000). Input VAT can only be recovered when it is supported by a valid tax invoice and relates to taxable business activity, which is why purchase invoices matter as much as sales invoices.

A quick check for VAT-inclusive prices: if a receipt shows SAR 1,150 including VAT, the VAT portion is 1,150 x 15 / 115 = SAR 150, and the price before VAT is SAR 1,000.

What a tax invoice must show

ZATCA's invoicing guideline describes two types of invoice. Since e-invoicing started, both must be generated by a compliant electronic system, not handwritten or typed in a word processor.

Standard tax invoice (mainly B2B)

• The title "Tax Invoice", the issue date and a sequential invoice number
• Supplier's name, address and VAT number
• Customer's name and address, and the customer's VAT number if registered
• Description, quantity and unit price of goods or services, and any discount
• Taxable amount, VAT rate, VAT amount in SAR and total including VAT
• A QR code (under the e-invoicing rules)

Simplified tax invoice (mainly B2C)

Used for sales to consumers and, under ZATCA's guideline, low-value supplies below SAR 1,000. At minimum it shows the issue date, the supplier's name, address and VAT number, a description of what was sold, the amount payable, and either the VAT amount or a clear statement that the price includes 15% VAT. It must also carry a QR code. Our ZATCA Phase 2 e-invoicing guide explains the technical side.

Invoices must be issued in Arabic (other languages may be added) and amounts must be stated in Saudi riyals.

Records you must keep

ZATCA expects you to keep invoices, credit and debit notes, import documents, accounting books and VAT working papers. Records must generally be kept for at least six years from the end of the relevant tax period, and longer for capital assets and real estate (at least 15 years for real estate). Records should be kept in Arabic and be available to ZATCA on request. Electronic storage is accepted when it meets ZATCA's conditions.

How software makes VAT compliance easier

Most VAT errors come from manual work: a missed invoice, a wrong rate on an item, or purchases recorded without a valid VAT number. A good accounting system reduces these risks by:

• Applying the correct VAT category to each item and customer automatically
• Issuing ZATCA-compliant standard and simplified invoices with QR codes
• Keeping sales, purchase, credit-note and stock records in one place
• Producing a VAT summary per tax period that maps to the boxes in your return
• Storing records securely so you can answer an audit request quickly

AxoOne Inventory & Accounting links billing, purchases, stock and ledgers, so the VAT figures in your reports come from the same transactions you recorded. If you run a shop or restaurant, our cloud POS issues simplified invoices at the counter and feeds the same books.

Ready to simplify your VAT returns? Explore AxoOne Inventory & Accounting software or book a free demo with our Riyadh team.

Frequently asked questions