What is VAT?
Value Added Tax (or VAT) is an indirect tax imposed on all goods and services that are bought and sold by businesses, with a few exceptions. VAT is applied in more than 160 countries around the world as a reliable source of revenue for state budgets. VAT is imposed at each stage of the supply chain from the production and distribution to the final sale of the good or service. Saudi Arabia imposed VAT on January 1, 2018 (Rabi Al-Thani 14, 1439). The VAT was introduced at a standard rate of 5%.
for more details about the VAT in Saudi Arabia, check the below website
Value Added Tax - VAT is applied in more than 160 countries around the world as a reliable source of revenue for state budgets. VAT is imposed at each stage of the supply chain from the production and distribution to the final sale of the good or service. The consumer pays the VAT cost of purchased goods and services. Businesses pay the government the VAT collected from their customers’ purchases and refund the VAT they paid to their suppliers.
Is it mandatory to register?
In February 2017(Jumada Al-Awwal 1438), Saudi Arabia ratified the GCC VAT framework and committed to impose VAT with effect from January 1, 2018 (Rabi Al-Thani 14, 1439). VAT will be introduced at a standard rate of 5%.All companies, businesses or entities which make an annual taxable supply of goods and services in excess of SAR 375,000 are legally required to register for VAT by 20th December 2017.
Impact of VAT
Value Added Tax (VAT) is not just an accounting or tax challenge; it impacts every part of your business with regards to cash flow, costing of capital, pricing of products and services, financial reporting, tax accounting, compliance processes, supply chain, procurement and contracting, and all technology currently enabling this ecosystem.
VAT Manuel by Saudi Government
Professional Touch VAT Certificate
Check your VAT eligibility
Annual sales threshold for VAT registration
a) Less than 187,500 - Exempted
b) From 187,500 to 375,000 - Optional
c) More than 375,000 - Mandatory