TL;DR — the key facts
What you need to know
Saudi Arabia raised VAT from 5% to 15% in July 2020. Businesses with taxable supplies above SAR 375,000 must register. Returns are filed monthly (above SAR 40M revenue) or quarterly.
Phase 2 requires real-time or near-real-time clearance of B2B invoices with ZATCA before delivery to the buyer. Rollout is by taxpayer segment — check ZATCA's wave announcements for your revenue bracket.
Zakat is a religious levy of 2.5% on the Zakat base (broadly: equity + long-term debt minus fixed assets and long-term investments) applied to Saudi and GCC-national shareholders' proportional ownership.
Timeline
July 2020
VAT raised from 5% to 15%.
December 2021
Fatoora Phase 1: all VAT-registered businesses must generate structured e-invoices.
January 2023
Fatoora Phase 2 Wave 1: largest taxpayers (above SAR 3B revenue) required to integrate with ZATCA API.
2023–2026
Phase 2 rolling waves by revenue bracket — check ZATCA portal for your wave date.
VAT and invoicing compliance
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15%, raised from 5% in July 2020 to help fund Vision 2030 initiatives. There is no reduced rate — standard 15% applies to most goods and services unless specifically zero-rated or exempt.
Fatoora is Saudi Arabia's mandatory e-invoicing system run by ZATCA. Phase 1 (structured invoice generation) applies to all VAT-registered businesses. Phase 2 (real-time clearance via ZATCA API) rolls out in waves by revenue size — if your annual revenue exceeds SAR 40M you are likely already in scope.
Seller name, address, and VAT number (15-digit); buyer name and VAT number (for B2B); invoice number; date; description of supply (in Arabic); unit price; VAT amount; total including VAT; and a ZATCA-compliant QR code for simplified (B2C) invoices.
No. Zakat applies to the Saudi/GCC-national ownership proportion. Foreign shareholders' share is subject to income tax at 20%. Mixed-ownership companies pay Zakat on the national portion and income tax on the foreign portion.
Mandatory registration when taxable supplies in the past 12 months exceed SAR 375,000. Voluntary registration is available at SAR 187,500. Non-resident businesses making taxable supplies in Saudi Arabia must register regardless of threshold.
