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What changed? On 18 April 2025, the Zakat, Tax and Customs Authority (ZATCA) published approved amendments to the VAT Implementing Regulations in the Official Gazette. Most changes are effective immediately, with key deferred dates for VAT grouping and the deemed supplier rule for electronic marketplaces. This guide breaks down the updates and what Saudi corporate taxpayers need to do now.
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Key Effective Dates & Who’s Affected
| Provision | Effective date | Who should act |
|---|---|---|
| General amendments across multiple Articles | 18 Apr 2025 | All VAT-registered businesses |
| VAT grouping (new conditions, ongoing eligibility, ineligible persons) | 15 Oct 2025 (180-day grace from 18 Apr 2025) | Existing & prospective VAT groups (corporate groups) |
| Deemed supplier — electronic marketplaces (Article 47(3)) | 1 Jan 2026 | Marketplaces, platform operators, aggregators, intermediaries |
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Headline Changes at a Glance
VAT Grouping (Arts. 10–12)
- All members must qualify for VAT registration individually.
- Persons licensed in special economic zones with customs suspension status and eligible refund persons (Art. 70) are generally ineligible.
- Limited exceptions (e.g., certain licensed real estate developers; eligible donors to public-benefit projects).
- Submit a group agreement with roles/responsibilities. 180-day transition from 18 Apr 2025.
Electronic Marketplaces (Art. 47)
- Marketplace defined; must facilitate transactions to be in scope.
- Deemed supplier where facilitating: (A) non-resident suppliers, (B) unregistered resident suppliers — subject to carve-outs if platform is not setting T&Cs/price/collecting payment/handling complaints/promotions and correct principal is disclosed on contracts/invoices/receipts.
- Start date for Art. 47(3): 1 Jan 2026.
Nominal (Deemed) Supplies (Art. 15)
- Alignment with GCC VAT Agreement; documentary proof required where input VAT not recovered.
- Value must reflect any input VAT previously deducted/refunded on related costs.
Transfer of Economic Activity (Art. 17)
- TOGC requires transfer of all necessary tangible & intangible assets.
- Notify ZATCA by end of the month following the transfer (supplier & recipient).
- If conditions not met (incl. notification), treat as taxable supply.
Customs Suspension & SEZs (Art. 32 bis)
- 0% VAT for supplies into customs suspension; re-exports after temporary import.
- Rules clarified for supplies to/within/between SEZs; water and energy into SEZs taxed at standard rate.
Services to Non-GCC Residents (Art. 33)
- Zero-rating exceptions narrowed where a connected Saudi resident directly benefits and is not entitled to full input deduction.
Government Grants (Art. 39)
- Amounts paid by a government entity may be consideration (taxable) if tied to goods/services provided to that entity.
Input VAT — Financing Contracts
- 12-month payment rule clarified; exception for valid financing contracts if supplier reported output VAT and written confirmation is held.
Further Input VAT Restrictions (Art. 50)
- Non-deductible categories expanded (e.g., food/hospitality, workplace beverages, medical insurance/healthcare), unless statutorily required.
- “Restricted vehicles” clarified; exceptions for >10-passenger vehicles, heavy equipment carriers, resale/lease, emergency, exclusive economic use.
Credit/Debit Notes & Corrections
- Credit/debit notes: issue within 15 days from the end of the month after the triggering event.
- Corrections/time limits now framed by net tax due; ZATCA may assess after five years with taxpayer consent.
Refunds & Offsetting (Arts. 69–73)
- ZATCA may offset refundable amounts against other liabilities it administers.
- Eligible persons (Art. 70): added data fields; min claim SAR 5,000; keep records for 6 years; misuse can lead to cancellation.
- Tourist refund services: 0% VAT on services of approved providers; scheme details to be issued by ZATCA.
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Deep-Dive: How the Changes Impact Corporate VAT Operations
1) Re-assess VAT Group Memberships
- Confirm each member independently qualifies to register.
- Screen for ineligible persons (SEZ licensees under customs suspension; Art. 70 eligible refund persons) and consider exceptions (e.g., certain LREDs, public-benefit donors).
- Draft/refresh the group agreement and appoint the representative member; diarize 15 Oct 2025 for compliance.
2) Prepare Marketplaces for the Deemed-Supplier Shift
- Map scenarios A & B (non-resident vs. unregistered resident suppliers) and document carve-outs (T&Cs, pricing, payment, complaints, promotions).
- Update contracts, checkout flows, invoicing logic, and tax engines ahead of 1 Jan 2026.
3) Tighten Documentation
- Retain evidence when input VAT isn’t recovered on nominal supplies.
- For TOGC: ensure both parties notify ZATCA timely; keep the transfer agreement and asset lists.
- Implement a 15-day cycle for credit/debit notes after month-end of the triggering event.
4) Employee Benefits & Purchasing Policies
- Revise policies around food/hospitality, workplace beverages, and medical insurance/healthcare — deductible only if mandated by law.
- Re-classify vehicle pools against the clarified restricted vehicles definition.
5) Refund Processes
- Build the new SAR 5,000 minimum check into refund workflows for eligible persons.
- Extend record retention to 6 years for refund claims; validate added data fields (e.g., customs details, payment dates).
- Expect offsetting where other liabilities exist with ZATCA.
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Compliance Checklist (Save & Share)
- Confirm which amendments apply to your business from 18 Apr 2025.
- For VAT groups: re-test eligibility, update agreements, and align by 15 Oct 2025.
- For marketplaces: implement deemed-supplier controls for 1 Jan 2026.
- Enable 15-day issuance SLA for credit/debit notes.
- Refresh policies on non-deductible input VAT (Art. 50) and financing contracts.
- Upgrade refund workflows (Art. 70) and anticipate offsetting (Art. 69(5)).
- Document TOGCs & cessation; notify ZATCA timely; maintain records per Art. 66.
FAQs
- Are the amendments already in force?
- Yes, most changes apply from 18 Apr 2025. VAT grouping conditions apply from 15 Oct 2025; the deemed-supplier rule for marketplaces starts 1 Jan 2026.
- We’re in an SEZ — can we join a VAT group?
- Entities licensed to operate in SEZs with customs suspension status are generally ineligible for VAT grouping under the new rules (limited exceptions apply).
- Is employee medical insurance input VAT deductible?
- Generally no, unless the employer is under a statutory obligation to provide it (then deduction may be allowed).
- What’s new with tourist VAT refunds?
- Services of approved refund providers are zero-rated; detailed scheme rules (providers, eligible goods, procedures) will be issued by ZATCA.
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References & Official Links
- Official Gazette — publication on 18 April 2025
- ZATCA — Implementing Regulations (Arabic, April 2025 update)
- ZATCA — Guideline clarifying amendments (Arabic)
- PwC — Approved amendments & effective dates
- KPMG — Tax Alert: key provisions (Arts. 10–12, 47, 50, 70–73)
- DLA Piper — Effective dates & highlights
- EY — Summary of amendments (nominal supplies, TOGC, grants, corrections)
Disclaimer: This guide is general information for corporate taxpayers in Saudi Arabia. Always confirm applicability on the ZATCA portal and seek professional advice for your facts and contracts.
