Tax Flash: VAT guideline for persons obligated to pay tax in special cases

On 25 December 2025, the Zakat, Tax, and Customs Authority (ZATCA) issued guidelines clarifying the special-case rules for the application of value-added tax (VAT) on deemed suppliers in relation to online marketplace (OMP) businesses. The guidelines can be accessed here.

The release of the guidelines follows ZATCA’s approved amendments to the VAT Implementing Regulations (“regulations”) earlier in 2025, where changes were introduced to Article 47 relating to persons subject to tax in special cases. While most changes took effect on 18 April 2025, the amendments under Article 47(3) of the regulations are considered effective as of 1 January 2026.

A summary of the key clarifications is provided below:

The guidelines provide the following characteristics of an online marketplace:
- A digital platform or network that connects and enables transactions between groups of users through technological infrastructure.
- Facilitates interaction and transactions among the buyers and sellers of goods and services.
- An online marketplace can be seen as facilitating the supply of goods or services if it performs any of the below activities:
  - Participating in the process of ordering goods or services and delivering them.
  - Defining or controlling the terms and conditions of the supply.
  - Exercising direct or indirect control in the delivery of goods or services to customers.
  - Managing transactions through its platforms.
  - Handling complaints, providing remedies, or offering warranties.
  - Using the trademark of the online marketplace on the supplies made through it.

Online marketplace operators are not considered as facilitating supply of goods or services in following scenarios:
- Payment processing only.
- Display or advertisement only.
- Customer redirection, i.e., an OMP redirects the customer to another OMP through which goods or services are supplied.

The OMP operator shall be deemed to have purchased the service from the non-resident supplier and further supplied it to the customer in its own name, provided all of the following conditions are satisfied:
- The services are provided electronically.
- The OMP operator facilitates the supply that takes place in Saudi Arabia.
- The primary supplier is a non-resident entity from a Saudi VAT perspective.

Primary supplier	OMP operator	VAT applicability for deemed purchases	VAT applicability for deemed supply through OMP
Non-resident	Registered resident	OMP operator shall declare the transaction under reverse charge mechanism (RCM), assuming OMP operator is registered as per Saudi VAT legislation	Taxable with 15 percent VAT
Non-resident	Resident but not obligated to register	Non-resident supplier shall be obligated to register under Saudi VAT legislation and charge VAT	Not subject to VAT
Non-resident	Registered non-resident	OMP operator shall declare the transaction under reverse charge mechanism (RCM)	If customer is registered as per Saudi VAT law, then the customer shall declare the transaction under RCM If customer is unregistered as per Saudi VAT law, OMP operator shall levy 15 percent VAT on taxable supply on forward charge basis
Non-resident	Unregistered non-resident	Outside the scope of Saudi VAT law, assuming transaction performed outside Saudi Arabia	Assuming customer is registered as per Saudi VAT law, then the customer shall declare the transaction under RCM

OMP operator shall be deemed to have purchased the goods or services from an unregistered resident supplier and further supplied it to the customer in its own name provided all of the following conditions are satisfied:
- Facilitating the supply of goods or services in Saudi Arabia.
- Acting as an intermediary for an unregistered resident supplier of goods or services in Saudi Arabia.

Primary supplier

OMP operator

VAT applicability for deemed purchases

VAT applicability for deemed supply through OMP

Unregistered Supplier

Resident

Outside the scope of the Saudi VAT law

Taxable with 15 percent VAT

Unregistered Supplier

Non-resident

Outside the scope of the Saudi VAT law

If customer is registered as per Saudi VAT law, then the customer shall declare the transaction under RCM

If customer is unregistered as per Saudi VAT law, OMP operator shall levy 15 percent VAT on taxable supply on forward charge basis

ZATCA has clarified that the difference between the buying price and resale price of the OMP platform will represent the margin for the platform with respect to deemed supply. Accordingly, the OMP operator shall not charge any VAT on its commission to the primary supplier as VAT is already included in the resale price charged to the customer.

The OMP operator shall not be considered as a deemed supplier provided all of the following conditions are satisfied:
- It is explicitly stated that the primary supplier is the supplier of goods or services during the supply process. This arrangement is documented through the following:
  - Data displayed to the customer during the supply process conducted through the platform.
  - Data included in the contractual agreements between all parties to the transaction: the primary supplier, the online marketplace, and the customer.
  - Tax invoice and receipts must clearly state that goods or services are supplied by the primary supplier.
- The OMP operator must have a specific role in the supply process conducted through it, which is generally achieved through the following:
  - OMP operator should not set the terms and conditions related to the supply of goods or services
  - OMP operator does not determine the fee for supply of goods or services.
  - OMP operator does not claim for consideration for the supply from the customers due to supply made through it, whether directly or indirectly.
  - OMP operator does not collect the payment for supplies from customers.
  - OMP operator does not handle complaints related to the supply.
  - OMP operator does not provide offers or discounts to any customers or provide any compensation.

OMP operator must conduct a reasonable verification process to ensure the supplier’s status is documented clearly.
OMP operator must determine the residency status of its suppliers as a part of its vendor registration process. Online marketplace platforms may determine the residency of their suppliers based on their address or bank account addresses.
OMP operator must maintain official proof of residence of suppliers to determine their residency status.
OMP operator may also check tax registration status through the use of API tools provided by ZATCA upon prior request.
Such process must be performed on a regular basis.
Needs to be compliant with the VAT law and regulations.

Implications for businesses

The clarified deemed supplier rules require online marketplace operators to enhance supplier verification, maintain residency records, and adjust contractual and invoicing practices to meet VAT compliance requirements. Businesses must assess their supply processes to avoid unexpected VAT liabilities.

For a detailed discussion on the impact of the deemed supply provisions on your business, please do not hesitate to contact our team of tax professionals.