Deemed Supplier Provisions for Online Marketplaces – Effective January 2026

📌 Introduction

Starting January 1, 2026, Saudi Arabia will implement the Deemed Supplier Provisions for online marketplaces under its VAT regime, in line with global best practices. These rules shift VAT liability from individual third-party sellers to the online marketplace operator, making the platform the “deemed supplier” for VAT purposes. The move is aimed at improving VAT compliance in e-commerce and ensuring a level playing field for local and foreign sellers.

🏢 Who Is Affected?

• Online marketplace operators facilitating sales between third-party sellers and buyers in Saudi Arabia.
• Corporate taxpayers who operate B2C or B2B e-commerce platforms.
• Foreign digital platforms selling goods or services to Saudi consumers.
• Third-party sellers who previously handled VAT collection and remittance themselves.

📖 Key Features of the Deemed Supplier Provisions

• The online marketplace will be treated as if it is the seller for VAT purposes, even though the actual goods/services are supplied by third-party sellers.
• The platform must charge, collect, and remit VAT on all applicable sales made through its system.
• Third-party sellers may still need to register for VAT if they make taxable supplies outside the marketplace or above the VAT threshold.
• The rules apply to both goods and certain categories of digital services.

💰 VAT Collection & Reporting

Under the new system:

• Marketplace operators will issue VAT-compliant invoices to buyers.
• VAT must be reported and remitted to ZATCA as part of the operator’s regular VAT return.
• Special record-keeping requirements will apply to track sales by third-party sellers.
• Refund processes for returned goods must include corresponding VAT adjustments.

Non-compliance could result in VAT penalties, late payment fines, and reputational damage.

📑 Compliance Requirements

• Register for VAT (if not already registered) before January 2026.
• Update invoicing systems to reflect deemed supplier VAT responsibilities.
• Implement controls to differentiate between sales made through the platform and those made directly by sellers.
• Maintain sales data for at least ten years in accordance with ZATCA’s audit rules.

📊 Example Scenario

A Saudi-based online marketplace facilitates a sale of electronics worth SAR 1,000 from a third-party seller to a Saudi customer. Under the deemed supplier rules, the marketplace must charge 15% VAT (SAR 150) to the customer, issue the VAT invoice, and remit SAR 150 to ZATCA, regardless of whether the seller is VAT-registered.

⚠️ Common Risks for Corporate Taxpayers

• Failing to adjust contracts with third-party sellers to account for VAT responsibilities.
• Not updating accounting and ERP systems in time for the January 2026 start date.
• Overlooking cross-border transactions that may trigger additional compliance obligations.
• Ignoring record-keeping requirements, leading to penalties during audits.

💡 Best Practices for Marketplace Operators

• Engage with tax advisors now to prepare for the new VAT model.
• Communicate changes to third-party sellers well before the effective date.
• Implement automated VAT calculation tools to avoid manual errors.
• Review contracts to ensure legal protection against seller disputes over VAT liabilities.

✅ Conclusion

The Deemed Supplier Provisions effective January 2026 represent a major shift in VAT compliance for Saudi Arabia’s e-commerce sector. Corporate taxpayers operating online marketplaces must act now to upgrade systems, align contracts, and prepare for seamless VAT handling. By proactively adopting best practices and ensuring compliance, businesses can avoid penalties and strengthen their position in the growing Saudi digital economy.