How to Calculate your Payable VAT in Saudi Arabia for 2022

VAT in Saudi Arabia is an additional tax that customers must pay on specific products and services. VAT in Saudia is Currently standing at 15%. The GAZT is the KSA’s tax authority, and it is responsible for the region’s VAT policy and implementation.

The central concept behind this tax is to expand the government’s revenue. Moreover, it is also a part of the economic reforms. The introduction of this tax in Saudi Arabia on January 1, 2018, has made the daily lives of the people and businesses in the Kingdom much more complicated.

In addition, this is because a 5% tax is now charged on almost every transaction that occurs in the country. With this new addition to their daily life, people and business owners find it challenging to understand how this tax works, what goods and services are taxed, and how to calculate this tax.

What is VAT? (Value Added Tax), and how does it work?

It is a tax on shoppers pending levied on commercial dealings and imports. It is generally charged at each sound and services supply chain stage.

Moreover, the overall consequence is that enterprises are unaffected, and the eventual consumer bears the burden of this tax. Governments have been taxing their populations for ages, and it is a mechanism used in over 180 nations throughout the world.

In addition, the state uses the money earned from taxes to build, develop, and maintain infrastructure, facilities, road networks, as well as other public services that serve and benefit its population.

What is VAT in Saudi Arabia?

In a word, VAT in Saudi Arabia is an additional tax that customers must pay on specific products and services. When a VAT-registered firm in the Kingdom offers a service or product in a store or outlet, it must now charge a 15% value-added tax to customers.

Customers must pay 15% value-added tax on the forefront of the industry price of things they purchase, which the firm must account for individually & remit to the government. In addition, this is referred to as Output VAT. In turn, this VAT-registered company must pay 15% value-added tax to its suppliers (who are also registered) for the same goods it would later sell to customers.

Calculation of VAT in Saudi Arabia?

This is known as ‘Input VAT.’ The amount payable to the government will compute after subtracting the VAT received from customers from the total sum of VAT paid to suppliers. A Detailed Link to this is given here.

VAT Due = ‘Output VAT’ – ‘Input VAT.’

How to get VAT Number in Saudi Arabia?

Follow these steps: Access the Zakat, Tax, and Customs Authorities portal to complete the service.

From the list of internet services, select (Verify) service.
Select the service (Verify Value added tax registration certificate).
Click the (Explore) button after entering the relevant information.
Further, if certificate data is available, it will be displayed.

Saudi Arabian financial services

The provision of credit or a guarantee of honor; any current, deposit, or savings account in operation; Derivatives, stock options, and checks are examples of financial instruments.

Moreover, loans and lines of credit, foreclosures, and commercial leasing all charge interest or borrowing fees with an express margin. In addition, purchase or transference of a contract of insurance, as well as life insurance contract reinsurance.

How Low/High it is as compared to other countries

Here is a table below that describes the VAT comparison to other countries:

Other countries	VAT rates
Saudi Arabia	15%
Europe	19-22%
Turkey	18%
UK	20%
India	12-15%
Philippines	12%
Lebanon	10-11%
Egypt	13%
Morocco	20%
Indonesia	10%
Bangladesh	15%
Sudan	18%

Frequently asked Questions

a. What is the formula for calculating VAT?

VAT-inclusive pricing is calculated by multiplying the cost minus VAT by 1.2 to get a price that includes the average rate of VAT (20%). Multiply the price minus VAT by 1.05. Moreover, this will give you pricing that consists of a reduced VAT rate of 5%.

b. In Saudi Arabia, who is responsible for paying VAT?

In a word, VAT in Saudi Arabia is an extra tax that customers must pay on certain goods and services. So, in addition, when a VAT-registered firm in the Kingdom offers an item or brand in a store or outlet, it must now charge a 15% VAT to customers.

c. Do we have to charge Saudi Arabia VAT?

Unless the supply in issue is specifically exempt, all goods and services produced in the KSA to deemed taxed supplies for VAT purposes. Certain stores are exempt from taxation. Moreover, it is chargeable with goods and services provided in the Kingdom of Saudi Arabia by residents and non-residents, as well as the importation of goods.