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In an effort to boost VAT compliance in the Kingdom, the General Authority of Zakat and Tax (GAZT) released guidelines, on 2 March 2021, for VAT registration and payment for online store owners engaged in e-commerce activities. 

In detail

The guidelines state that it is mandatory for online store owners to register for VAT if their annual turnover exceed SAR 375,000, while registration is optional if yearly sales fall between SAR 187,500 and SAR 375,000. Online stores are defined as any digital platform that is used for e-commerce activities, which includes activities on Instagram, Whatsapp, Facebook, and LinkedIn, among others.

GAZT’s e-commerce guidelines walk users through registering for VAT, displaying the VAT certificate on their platforms, filing VAT returns, and paying their VAT dues. Registration first requires that the online store be registered at the Ministry of Commerce or the Ministry of Investment, which is followed by registration on the GAZT portal. Approval of registration is granted by GAZT within two business days. Once a VAT certificate is acquired, it is mandatory for online stores to display it on their platforms to avoid penalties up to SAR 50,000. After registration, the taxpayer will be required to file their VAT returns accordingly on the GAZT portal.

It is not clear at this stage which businesses are being targeted, i.e. whether it is resident and non-resident taxpayers that must comply with the new guidelines.

We shall keep you up to date on any further developments. In the meantime, our teams are available to discuss the guidelines and assess their impact on your business.

Get in Touch

Riyadh Office

Wadih Abu Nasr

Head of Tax, Saudi Levant Cluster

E: wabunasr@kpmg.com

Nick Soverall

Senior Director, Head of Indirect Tax

E: nsoverall@kpmg.com

Peter Bourke

Senior Director, M&A/ Int’l Tax

E: peterbourke@kpmg.com

Mohamed Araji

Senior Director, FS/ Tax Reimagined

E: maraji@kpmg.com


Ali Sainudheen

Senior Director, Domestic Tax

E: asainudheen@kpmg.com

Raza Qadir

Senior Director, Corporate Tax and Advisory lead

GCMS and inbound compliance lead

E: razaqadir@kpmg.com

Saber Al Zawaideh

Director,  Domestic Tax

E: salzawaideh@kpmg.com

Faisal Tanvir

Director, Domestic Tax

E: FTanvir@kpmg.com

Oleg Shmal

Director, Indirect Tax

E: oshmal@kpmg.com

Jeddah Office

Mohamed ElSwefy

Senior Director, Family Office & Private Clients

E: mohamedelswefy@kpmg.com

Salam Eido

Director, Indirect Tax

E: seido@kpmg.com

Muhammad Masood

Director, Domestic Tax

E: muhammadmasood@kpmg.com

Khobar Office

Tareq Al Sunaid

Partner, Head of Domestic Tax

E: talsunaid@kpmg.com

Mohammad Kamran Sial

Senior Director, Domestic Tax

E: ksial@kpmg.com

Anil Bahl

Director, Indirect Tax

E: anilbahl@kpmg.com

Mohamed Gouda

Director, Domestic Tax

E: mohamedgouda@kpmg.com