Value-added tax (VAT) was introduced in the Kingdom of Saudi Arabia on January 1, 2018, as part of the country’s efforts. The basic rate of VAT applied on table supplies and imports in KSA was 5%.

However, in July 2020, Zakat, Tax, and Customs Authority (ZATCA) (earlier known as GAZT) issued a decree to increase the standard VAT rate by 15%, effective immediately. The increase in VAT has affected businesses and individuals and has further highlighted the importance of understanding VAT compliance.  

The VAT number assigned to each business is unique and specific to that particular entity. This number helps to identify the company for tax purposes. It is important to verify a VAT number to make sure that the business is real and is paying taxes properly. When doing business with a company, it is important to always check their VAT number. This process is called VAT number identification. 

Current VAT rate in KSA

VAT stands for Value Added Tax. It is a tax imposed on the supply of goods or services. The tax is levied at the value addition of each stage in the supply chain, from the production and distribution to the final sale of the product or service to the customer.

The supplier should be registered for VAT, to qualify for zero rates. Below is the list of supplies that are charged at a 0% VAT rate.

• Exports of goods
• Services supplied to non-GCC residents
• International goods and passenger transport services
• Supply of qualifying means of transport
• Qualifying medicines and qualifying medical goods

Exempt supplies under KSA VAT

Exempt supplies are not subject to KSA VAT regulations and do not attract VAT. Businesses handling exempt supplies neither collect VAT on sales nor seek reimbursement for input VAT paid on purchases. List of exempted supplies under KSA VAT:

• Credit
• Operation of current, deposit and savings accounts
• Financial instruments
• Life insurance
• Interest on loans, credit or debit securities

KSA VAT number verification

Zakat, Tax and Customs Authority manages VAT in the Kingdom of Saudi Arabia (KSA). The authority mandated that businesses and individuals must obtain VAT registration;

1. Recognize VAT number and VAT Quantity
2. Importance of verifying the VAT number
3. VAT Administration in Saudi Arabia

In Saudi Arabia, to verify the VAT number, visit the official tax website. https://zatca.gov.sa/en/Pages/default.aspx  

VAT accounting Software’s

The majority of accounting software is expensive and understanding its working may require a significant amount of labor.

• Elate
• Odoo
• ITSS
• QuickBooks
• TallyPrime 5.0
• ERPNext
• ZOHO
• Arabian software
• Oracle
• Wave

List of goods and services on which 15% VAT is charged

All goods and services except exempt supplies and zero-rated supplies are subject to 15% VAT.

VAT rate on Imports and exports

From 1 July 2020, whether the goods are imported on or after are subject to a 15% VAT rate. However, the rate was 5% before the amendment. 

Goods and services when exported outside the council territory are deemed to zero-rate VAT. In regard to this, the business is allowed to recover the associated input VAT by provisions of VAT.

VAT Enabled ERP

VAT-enabled ERP Software automates the business processes and helps companies run their business more efficiently and to gain greater insight into their business activities with lasting benefits.

VAT Consultation

Verifying a VAT number is a crucial step when doing business in Saudi Arabia. With the introduction of e-invoicing in Saudi Arabia, business can handle their invoices electronically. In short, verifying a VAT number is an important step to ensure that you are dealing with a legitimate business. Always verify a VAT number to maintain smooth and secure business operations.

Since the implementation of VAT in Saudi Arabia, the compliance burden on medium to small-sized organizations has grown exponentially. If you’re a company owner and are seeking a dependable consultant for VAT consultation Services in Saudi Arabia, contact us at [email protected] or call us at +971 4 239 8571.

Frequently Asked Questions

1. What is the VAT rate in Saudi Arabia?

The current VAT rate in Saudi Arabia is 15%.

• Is the VAT rate increased in Saudi Arabia?

When ZATCA introduced VAT in Saudi, the VAT rate was 5%. However, the government increased the VAT rate to 15% during the COVID pandemic.

•  What are the benefits of Verifying VAT numbers in KSA?

The benefits of verifying VAT number in KSA:

1. Check the authenticity of the VAT number
2. Prevents associating with sellers using fake VAT numbers
3. Can avoid VAT fraud at the origin of the transaction
4. Corrective of potential errors while reporting e-invoices to ZATCA

• Why is it important to confirm Saudi Arabian VAT numbers?

To confirm the legitimacy of the seller and the VAT number on the invoices, it is crucial to check the VAT numbers.