Saudi Arabia: VAT amendments approved, effective immediately

The Zakat, Tax, and Customs Authority (ZATCA) on April 18, 2025, published Board Resolution No. (01-06-24) in the Official Gazette, approving amendments to the implementing regulations for value added tax (VAT). The amendments are effective immediately, except for changes in Article 47(3), which will take effect on January 1, 2026.

ZATCA had initially released guidelines on these amendments on November 19, 2024. 

Key changes include:

• VAT group provisions (Articles 10, 11, and 12):
  • New condition requiring all legal persons in a VAT group to have the right to register as taxable persons
  • Certain persons, such as those in special economic zones (SEZs) and eligible for VAT refunds, are ineligible for VAT group membership
  • Licensed real estate developers and eligible donors may qualify for VAT group inclusion
  • A grace period of 180 days from April 18, 2025, for existing groups to comply with new requirements
• Clarification on services subject to VAT (Article 14):
  • Detailed provisions on rights and services that are ineligible for VAT group membership
• Nominal supply provisions (Article 15):
  • Taxable persons must adjust nominal supply values based on input VAT deductions
  • Documentation required to show non-recovery of input VAT on nominal supplies
• Transfer of economic activity (Article 17):
  • Transfers must include all necessary assets to qualify as non-taxable
  • Supplier and recipient must notify ZATCA within 30 days of transfer
• Customs duty suspension and zero-rating (Article 32 bis):
  • Zero-rate VAT for goods in customs duty suspension and SEZ transactions
  • Applies to re-exported goods and services added to them
• Services to non-GCC residents (Article 33):
  • Clarifies zero-rating exceptions for services benefiting customers in member states
• Government subsidies (Article 39):
  • Government payments for goods or services are not subsidies if they are supply considerations
• Online marketplaces (Article 47):
  • Defines “online marketplace” and outlines VAT implications for electronic services and goods
  • Specific exceptions apply based on contractual and transactional arrangements
• Input VAT deduction restrictions (Article 50):
  • New categories added when input VAT is non-deductible, such as events and hospitality services
  • Exceptions for statutory insurance and health care obligations
• Tourist tax refunds (Article 73):
  • Defines "tourist" and conditions for tax refunds
  • ZATCA to list approved service providers for facilitating refunds

Read an April 2025 report prepared by the KPMG member firm in Saudi Arabia