Who Should Register for VAT in KSA?

Value Added Tax (VAT) registration rules in the Kingdom of Saudi Arabia (KSA) require a taxpayer to register for VAT if the annual taxable turnover exceeds a specific threshold limit. The VAT registration follows a lot of compliances, from recording the transactions as per the rules to reporting them to the authority timely.   

This article covers extensive guidelines on VAT registration in Saudi Arabia, including types of registration, registration procedure, and VAT deregistration regulations for the taxpayers in KSA.

Mandatory VAT registration in KSA

Businesses and individuals in KSA are required to register for KSA VAT mandatory within 30 days of the end of the month of meeting the following two conditions:

1. The taxpayer is resident in KSA
2. The total value of taxable supplies 
   • Exceeds SAR 375,000 in the previous 12 months
   • Will exceed SAR 375,000 in the coming 12 months

Voluntary VAT registration in KSA

The Zakat, Tax and Customs Authority (ZATCA) guidelines also provide an option to get a VAT registration number voluntarily if the following conditions are satisfied: 

1. The taxpayer is resident in KSA
2. In the previous 12 months, the total value of taxable supplies made or expenditures incurred exceeds SAR 187,500 

KSA VAT registration in special cases

VAT registration Saudi Arabia also requires VAT registration in specifically mentioned cases such as non-residents, group registration, etc. Let’s understand what is needed.

Non-residents

Non-residents who make taxable supplies to or buy goods or services from KSA non-registered persons will have to register under KSA VAT. In other words, if non-residents purchase or sell goods or services to non-registered customers in KSA, they are required to register under KSA VAT within 30 days of the first transaction they make in KSA.

A non-resident is advised to appoint a tax representative in KSA to apply for VAT registration, pay due tax and collect VAT from the customers in Saudia Arabia. The appointment of a tax representative will be approved by ZATCA, who will collect and pay tax and make necessary transactions on behalf of a non-resident.

VAT group registration

Legal persons who are residents of KSA can form a VAT group. Where one or more taxable persons hold more than 50% stake in one another, then such persons have an option to apply to ZATCA as a single VAT group. The joint ownership allows one or more taxpayers to use as a VAT group if they meet the following conditions: 

1. Every group member will have to perform the economic activity
2. The common control must exist among all group members, where an individual or an organisation holds 50% or more stake in all group members. The common owner could be a third party who does not need to be a group member
3. At least one VAT group member must independently have taxable supplies more than the specified threshold for VAT registration  

The ZATCA will issue a new Tax Identification Number (TIN) to the VAT group.

Multiple commercial registrations

Where any entity has multiple branches or commercial registrations, or fixed establishments in KSA or outside KSA, such entities will be issued only one VAT registration number. The main branch or a commercial registration is considered for VAT registration in KSA.

If an organisation has multiple fixed establishments in more than one country, the VAT payment and collection happens for each transaction in the most closely associated country. The inter-branch transfers or charges are not within the purview of the KSA VAT.

Exemption from VAT registration in KSA

The VAT registration in KSA is exempted if the taxpayer exclusively makes zero-rated supplies even if he crosses the mandatory registration threshold limit. They must retain relevant evidence that proves they make only zero-rated supplies.

How to register for VAT in KSA?

The taxpayers can apply for VAT registration from the ZATCA e-services portal if they have a valid TIN. Before applying for VAT registration, you must apply for TIN if you do not have it.

Step 1: Read instructions

The VAT registration application starts with the instructions on the first page about moving further to complete the registration application. 

Step 2: Fill in the taxpayer’s details

On the second page, the ZATCA portal auto-populates taxpayer’s details such as TIN, commercial registrations and address, after which they will be asked to provide the following information:

• Does an applicant import or export the goods or services
• (International Bank Account Number (IBAN) linked to the applicant’s VAT account
• Trigger date of becoming eligible to register for VAT 

Step 3: Fill in the financial details

To verify the eligibility for VAT, the portal on the third page requires requisite financial information from the taxpayers as follows:

• Expected taxable sales of the coming 12 months
• Actual taxable sales of the previous 12 months
• Expected taxable expenses for the coming 12 months
• Actual taxable expenses for the previous 12 months
• Relevant documentation evidencing sales and expense details which the taxpayers may attach with the application

Step 4: Fill in financial representative details (if the applicant is a non-KSA resident)

The fourth page requires eligible non-residents in KSA to provide information about their designated tax representatives as mentioned below:

• TIN (if available)
• Id number (Saudi, Iqama or GCC ID)
• Mobile number
• Email

Step 5: Provide a declaration

The last page will ask the applicant to provide a declaration to affirm that the details provided are accurate. The applicant must also enter his name, ID number, and his title in the organisation.

VAT deregistration in KSA

Let us understand the VAT deregistration rules provided in the VAT general guide.

Mandatory deregistration

A taxpayer must apply for VAT deregistration within 30 days if one of the following circumstances occur:

1. The taxpayer ceases to perform economic activity
2. The taxpayer ceases to make taxable supplies
3. The Value of a taxpayer’s supplies drops below the voluntary registration threshold of SAR 187,500 

However, a taxpayer registered for less than 12 months cannot apply for deregistration. The authority will approve and finalise the date of VAT deregistration.

Voluntary deregistration

Taxpayers registered for VAT voluntarily can apply for VAT deregistration if,

• 12 months have passed after their VAT registration
•  Their annual taxable turnover is below the mandatory registration threshold of SAR 375,000

Each business that is yet to register for VAT must check its eligibility for VAT registration in KSA at the end of each month to not miss the VAT registration deadline.