Value Added Tax (VAT) at 15% applies to most goods and services in Saudi Arabia. Every business with annual taxable supplies exceeding SAR 375,000 must register for VAT. Voluntary registration is available for businesses exceeding SAR 187,500.
Registration is done through the ZATCA portal. You will need your commercial registration number, tax identification number, bank account details, and estimated annual revenue figures.
VAT must be clearly shown on every invoice as a separate line item. Tafsee Books automatically calculates VAT for each line item and displays it in the format ZATCA requires — making manual calculations unnecessary.
Filing VAT returns is required quarterly for most businesses, though some may file monthly based on their revenue tier. Returns must be submitted within 30 days after the end of each tax period.
Input VAT (what you pay on purchases) can be deducted from output VAT (what you collect on sales). Tafsee Books tracks both automatically and generates a net VAT liability report each period.
Common mistakes include incorrect VAT calculations on mixed-rate products, late filing penalties, and failing to issue tax invoices for B2B transactions. Using accounting software that follows Saudi tax rules eliminates most of these errors.
Zero-rated supplies (like exports and international transport) still require VAT registration and reporting, even though the rate is 0%. Do not confuse zero-rated with exempt supplies.
Keep all VAT records for at least 6 years. Tafsee Books stores every transaction with a full audit trail, making ZATCA inspections straightforward.