Welcome to Saudi Arabia (KSA) VAT Calculator 2025

Current VAT rate in KSA?

The VAT rate in Saudi Arabia (KSA) is a significant tax applied to goods and services. As of July 1, 2020, the standard VAT rate in Saudi Arabia was increased to 15% by the Zakat, Tax and Customs Authority (ZATCA), up from the previous rate of 5%. This tax reform aims to diversify the Kingdom’s revenue streams and reduce its reliance on oil. Let’s explore the different VAT rates and how they impact businesses and consumers in Saudi Arabia.

Rate	Type	Description
15%	Standard Rate	Applies to most goods and services, with certain exceptions.
0%	Zero Rate	Covers specific exports, healthcare, education services, medicines, qualifying medical equipment, international transportation, and investment metals.
Exempt	Exempted Categories	Includes financial services and residential real estate.

Key VAT Categories in Saudi Arabia

1. Standard Rate (15%)
   The 15% VAT rate applies to the majority of taxable supplies in Saudi Arabia, including most goods and services. Businesses must charge this rate unless their products or services fall under zero-rated or exempt categories.
2. Zero Rate (0%)
   Certain supplies in Saudi Arabia are subject to a 0% VAT rate, meaning VAT is not charged on sales, but businesses can still reclaim VAT on their expenses. Common zero-rated supplies include:
   • Exported goods
   • Healthcare and education services
   • Medicines and medical equipment
   • International transportation services
     This rate also applies to the supply of investment metals and services provided to non-GCC residents.
3. Exempted Categories
   Some goods and services are VAT-exempt. This means that VAT is neither charged on sales nor recoverable on inputs. Key exempt sectors include:
   • Financial services
   • Residential real estate (rentals)

VAT Registration and Compliance

Businesses in Saudi Arabia are required to register for VAT and charge it on taxable transactions, depending on the applicable rate category. Ensuring proper VAT classification is crucial for avoiding penalties and ensuring compliance with ZATCA regulations. Correct classification also determines a business’s ability to reclaim input VAT on its expenses.

Transitional Provisions for VAT Rate Increase

In July 2020, when the VAT rate was raised from 5% to 15%, transitional provisions were introduced. These provisions aimed to ensure a smooth transition for businesses by outlining how existing contracts and invoices should be treated under the new VAT rate. Businesses must ensure that they follow these guidelines to stay compliant.

VAT-Exempt Categories and Business Implications

Certain categories, such as financial services and residential real estate, are exempt from VAT. Businesses operating in these sectors are not required to charge VAT on their services but may face limitations on recovering VAT paid on inputs. Understanding these exemptions is critical for businesses to avoid compliance issues and optimize their VAT obligations.

Customs Duties on Imports in Saudi Arabia

Customs duties in Saudi Arabia are imposed on imports based on the tariff rates effective on the payment date, in accordance with Saudi Customs regulations. These duties are calculated on the price of the imported goods, which includes the cost of goods plus freight and insurance costs to the Saudi port.

The total price is converted into Saudi Riyals (SAR) using the exchange rates published by the Saudi Central Bank (SAMA) on the date of the customs declaration. If the actual cost cannot be determined, customs duties are assessed based on the most comparable value.

Customs duties on imported goods may be calculated based on either the gross weight or net weight, depending on the tariff schedules. The gross weight includes all packing materials (internal and external), while the net weight excludes packing materials.

Payroll Taxes in Saudi Arabia

Unlike many other countries, Saudi Arabia does not have an individual income tax regime, meaning earnings from employment are not subject to income tax. However, there are other payroll-related taxes that employers and employees need to be aware of, primarily the social insurance tax.

Social Insurance Tax in Saudi Arabia

In Saudi Arabia, the social insurance tax is paid monthly and is based on:

1. Basic wage
2. Housing allowance (cash or in-kind)
3. Commissions

The tax rate differs for Saudi and non-Saudi employees:

• For non-Saudi employees, the social insurance tax rate is 2%, paid by the employer, with an upper limit of 45,000 Saudi riyals (SAR).
• For Saudi employees, the rate is 21.5%, with 9.75% paid by the employee and 11.75% paid by the employer.

Real Estate Transaction Tax (RETT) in Saudi Arabia

The Real Estate Transaction Tax (RETT) is imposed at a rate of 5% on the total real estate disposal value. This tax applies regardless of the condition, shape, or use of the property at the time of disposal. The RETT applies to:

• The transfer of land or constructed buildings.
• Disposal of a part of a property, such as a residential unit or communal area.
• Real estate transactions involving entities subject to RETT.

Exemptions may apply under specific conditions, so businesses must be aware of the rules surrounding these exemptions.

Other Taxes in Saudi Arabia

In addition to payroll taxes and RETT, Saudi Arabia does not impose several common taxes found in other countries, including:

• Stamp duty
• Transfer taxes
• Sales taxes
• Turnover or production taxes

However, Zakat (an Islamic tax) is applicable only to Saudi nationals.