How VAT is calculated in Saudi Arabia
The most common mistake when working backwards is subtracting 15% of the gross price. VAT is charged on the net figure, so you must divide by 1.15, not multiply by 0.85.
Registration and compliance
VAT in Saudi Arabia is administered by the Zakat, Tax and Customs Authority (ZATCA). Registration is mandatory above SAR 375,000 mandatory of annual taxable supplies. Registered businesses charge VAT on sales (output tax), reclaim VAT on business purchases (input tax) and file returns — usually quarterly, monthly for larger businesses.
GCC VAT rates compared
| Country | Standard rate | Introduced |
|---|---|---|
| Saudi Arabia | 15% | 2018 (raised 2020) |
| Bahrain | 10% | 2019 (raised 2022) |
| UAE | 5% | 2018 |
| Oman | 5% | 2021 |
| Qatar | 0% — not yet introduced | — |
| Kuwait | 0% — not yet introduced | — |
Frequently asked questions
What is the VAT rate in Saudi Arabia?
15% standard rate, in force since 1 July 2020 (5% from 1 January 2018). Some goods and services are zero-rated or exempt.
How do I add 15% VAT to a price?
Multiply by 1.15. SAR 1,000 + VAT = SAR 1,150.
How do I remove VAT from a Saudi Arabia price?
Divide the VAT-inclusive price by 1.15. SAR 1,150 ÷ 1.15 = SAR 1,000 net; VAT = SAR 150. Do not subtract 15% of the gross figure — that gives the wrong answer.
Who has to register for VAT in Saudi Arabia?
Businesses whose taxable supplies exceed SAR 375,000 mandatory / SAR 187,500 voluntary registration. Registration is through the Zakat, Tax and Customs Authority (ZATCA).
What is zero-rated in Saudi Arabia?
Typically: exports outside the GCC, international transport, qualifying medicines and medical equipment, investment metals. Zero-rated suppliers can still reclaim input VAT.
What is VAT-exempt in Saudi Arabia?
Typically: residential rent, certain financial services and life insurance (real estate sales moved to the 5% Real Estate Transaction Tax). Exempt suppliers cannot reclaim input VAT on related costs.
Can tourists reclaim VAT?
Saudi Arabia launched a tourist VAT refund scheme in 2025 for eligible purchases exported within 90 days.