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How to calculate the VAT TAX ZATCA


كيفية حساب الضريبة المضافة لهيئة الزكاة والضريبة

Basic information about the added tax


Added tax

​VAT is an indirect tax imposed on all goods and services that are purchased and sold by establishments, with some exceptions. Value-added tax is applied in more than 160 countries around the world, as it is a primary source of income that contributes to strengthening state budgets.​

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The added tax is an important tax in the Kingdom of Saudi Arabia, where the Zakat and Tax Authority is responsible for its implementation in accordance with the specified regulations. Added tax is a tax on the value added of goods and services sold and provided in the Kingdom. In this article, we will discuss the concept of VAT and its system in the Kingdom of Saudi Arabia, and the importance of the commitment of companies and individuals to this tax.

Definition of added tax

Added tax is a tax system imposed on goods and services at every stage of production, distribution and sale, where a percentage of the value of the good or service is added and collected from the final consumer. The added tax is imposed with the aim of generating revenue for the government and financing projects and public services.

The added tax system in the Kingdom of Saudi Arabia

In the Kingdom of Saudi Arabia, the VAT system has been applied starting from January 1, 2018. An added tax rate of 5% is imposed on most goods and services provided in the Kingdom. The Zakat and Income Authority obliges companies and individuals to register for VAT, submit periodic tax returns, and pay the tax due.

The importance of VAT compliance

The obligation to pay VAT is important for businesses and individuals in Saudi Arabia. Commitment to VAT reflects commitment to accounting and tax laws and regulations adopted in the Kingdom. The added tax contributes to generating revenues for the state to finance public services and infrastructure and improve the quality of life for citizens.

Register for VAT

Companies whose total annual revenues exceed the limit specified by law must register for VAT. Registering for VAT requires companies to submit the required documents, set up an appropriate accounting system for VAT registration, and submit tax returns regularly.

Exemptions and exceptions

There are some goods and services that are excluded from paying VAT in the Kingdom of Saudi Arabia. These exceptions include some basic food commodities and medical and educational services. However, companies are still required to register for VAT and submit tax returns even if they provide these excluded goods or services.

Financial impact analysis

VAT is considered part of the general tax system in the Kingdom of Saudi Arabia. It enables the analysis of the financial impact of the added tax by companies and individuals in financial planning and the determination of its costs and impact on the total costs of products and services.

Conclusion from the article

The GAZT is an important tax imposed on goods and services in the Kingdom of Saudi Arabia. This tax is an important source of government revenue and funding for public projects. Companies and individuals must be registered for VAT, submit tax returns regularly and pay the tax due. Commitment to VAT contributes to building a strong economy and achieving sustainable economic development in the Kingdom.

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