|VAT Rate on Digital Services||VAT on Cross-Border Electronically Supplied Services||Digital Reporting Requirements for Foreign Sellers Providing Electronically Supplied Services|
|Typically 15%||Yes||Mandatory if VAT registered|
VAT on Cross-Border Digital Services in Saudi Arabia
Foreign companies supplying digital services to the Kingdom of Saudi Arabia (KSA) are expected to register and charge VAT on sales of digital services to end consumers. End consumers are persons buying services who are not registered for VAT in the Kingdom of Saudi Arabia and are not identified by a valid VAT number.
Digital Services in Scope
Supplies of the following digital services by non-resident suppliers are liable for VAT in the Kingdom of Saudi Arabia:
- Any service relating to the transmission, emission, or reception of signals, writing, images, sounds, or information of any nature by wire, radio, optical, or other electromagnetic systems;
- The transfer or assignment of the right to use capacity for such transmission, emission, or reception;
- The provision of access to global information networks;
- The provision of audio and audio-visual content for listening or viewing by the general public on the basis of the program schedule by a person that has editorial responsibility;
- Live streaming via the internet;
- Supplies of images or text provided electronically, such as photos, screensavers, electronic books, and other digitized documents or files;
- Supplies of music, films, and games and of programs on demand;
- Online magazines;
- Website supply or web hosting services;
- Distance maintenance of programs and equipment;
- Supplies of software and software updates;
- Advertising space on a website and any right associated with such advertising.
The legislation gives a non-exhaustive list of digital services but does not mention any exemptions.
Determining the Location of the Saudi Arabian Consumer
KSA determines the location of the customer as follows:
- The invoicing address of the customer;
- The bank account details of the customer;
- The internet protocol address used by the customer to receive the wired and wireless telecommunications services and electronic services;
- The country code of the SIM card used by the customer to receive the wired and wireless telecommunications services and electronic services.
The determination of a customer’s residence should be based on the information held when the supply is made.
Services provided in a specific location: In cases where the wired and wireless telecommunications services and electronic services are provided at a telephone box, a telephone kiosk, a Wi-Fi hotspot, an internet cafe, a restaurant, or a hotel lobby or in other cases where the physical presence of the customer at a particular location is needed for those services to be provided, the place of supply will be this specific place.
VAT Registration for Foreign Companies
- VAT registration threshold for non-resident suppliers of Digital Services: No threshold
- Fiscal representatives: It is not mandatory, but it is possible to appoint a tax representative. ZATCA publishes a list of approved tax representatives. If a taxpayer appoints a tax representative, they will be jointly liable for the VAT obligations
- The VAT registration form shall be filled out and submitted electronically via ZATCA’s website
- VAT registration is mandatory within 30 days of the first supply on which the non-resident entity must pay VAT
VAT Returns and payment of taxes
VAT returns for non-residents
Once a non-resident company registers for VAT purposes in the KSA, the foreign business will have the same e-invoicing, reporting, and VAT return filing obligations as a local company. KSA does not apply a simplified VAT registration system, like the One Stop Shop system in the European Union.
|VAT Return Name||VAT Return Form|
|Filing Frequency||Monthly or quarterly, depending on the annual revenue of the company|
|Filing Deadline||Last day in the month following the end of the tax period to which the tax return relates. If a month’s last day falls on a non-working day, taxpayers are still liable to submit their VAT returns and pay any liabilities by that day.|
|Payment Deadline||Same as the filing deadline|
|Payment Currency||Saudi Riyals (SAR)|
|Fiscal Representative||It is not mandatory, but possible|
|Input Tax Recovery||Allowed, with certain conditions and restrictions|
|Record Storage||Businesses are required to keep VAT records for a period of six years and make them available for inspection upon request by the tax authorities.|
Digital Reporting Requirements for Cross-Border Digital Services
Digital reporting requirements apply if the non-resident company is registered for VAT in the KSA.
For more information about digital reporting requirements in the Kingdom of Saudi Arabia, see Saudi Arabia E-invoicing & Digital Reporting Guide.