Calculate the VAT on your amount quickly with the default 15% VAT rate.
Last reviewed - 21 July 2024
VAT Law and implementing regulations have been published and are applicable from 1 January 2018. VAT is imposed at a rate of 5% for most goods and services, with certain exceptions applicable. Effective 1 July 2020, the standard VAT rate was increased by the government to 15%.
The Excise Tax Law became effective on 11 June 2017, with tobacco products (at 100%), soft drinks (at 50%), and energy drinks (at 100%) selected as goods subject to the excise tax in Saudi Arabia.
To comply with the Saudi Arabian Excise Tax Law, manufacturers and importers of excisable goods are required to register with ZATCA. Businesses that fail to register and comply with the guidance issued by ZATCA will be considered tax evaders and will face penalties.
Customs duties are imposed on imports according to tariff rates in accordance with the Saudi Customs regulations. These duties are applied to the price of the imported goods, which includes freight and insurance costs to the Saudi port. The customs duties are assessed based on either the gross weight or net weight of the goods.
The government also provides tariff protection to locally produced goods, with rates reaching as high as 25%. Penalties for smuggling goods may include confiscation, customs duties, fines, and imprisonment.
In Saudi Arabia, there is no individual income tax regime. Earnings from employment are not subject to income tax. However, the social insurance tax is applied to the payroll. This tax is based on the basic wage, housing allowance, and commissions with a maximum threshold of SAR 45,000.
For non-Saudi employees, the social insurance tax is 2% and paid by the employer. For Saudi employees, the total rate is 21.5% (with 9.75% paid by the employee and 11.75% by the employer).
RETT is imposed at a rate of 5% of the total real estate disposal value, regardless of the property's condition. This tax applies to all types of real estate transactions, whether it is land or property under construction.
Certain exemptions may apply in specific cases. The rules also cover the transfer of real estate-rich entities.
The formula for calculating VAT in Saudi Arabia is straightforward:
VAT = Amount * VAT Rate
For example, if you purchase an item worth **SAR 500**, the VAT at a rate of 15% will be:
500 * 15% = SAR 75
The total price of the item would therefore be **SAR 575**.
Many businesses use online **VAT calculators** to simplify this process and ensure accurate tax calculations.
As part of its digitalization efforts, Saudi Arabia introduced **eInvoicing** requirements in December 2021. All businesses are required to issue electronic invoices for VAT-compliant transactions. This initiative aims to improve tax compliance and reduce fraud.
eInvoicing offers the following benefits:
A: You can calculate VAT by multiplying the amount by the VAT rate of **15%**. For example, if a product costs **SAR 100**, the VAT would be **SAR 15** (100 * 15%). The total price after VAT would be **SAR 115**.
A: The current VAT rate in Saudi Arabia is **15%**, which was implemented on **July 1, 2020** as part of the government’s efforts to increase non-oil revenues and support economic diversification.
A: To calculate VAT, multiply the price of the product by the VAT rate (15%). For example, for a product priced at **SAR 100**, the VAT would be **100 * 15% = SAR 15**. The total price after VAT would be **SAR 115**.
A: Yes! You can use the Saudi VAT calculator to calculate VAT for multiple items by entering each item's price individually and applying the VAT rate to each. Alternatively, you can add the prices together and calculate the total VAT on the combined amount.
A: The Saudi VAT calculator currently uses the **15%** VAT rate, but you can manually adjust the VAT rate if necessary (for example, for any future changes). Simply enter the new VAT rate in the calculator to perform your calculations.
A: VAT is a consumption tax imposed on most goods and services in Saudi Arabia. Its introduction helps diversify the kingdom's revenue streams, reducing dependence on oil exports. The funds raised from VAT are used to support public services such as healthcare, education, infrastructure, and social programs.
A: VAT applies to most goods and services in Saudi Arabia. However, certain goods and services are either **exempt** or **zero-rated** under the VAT law. For example, **food items**, **healthcare**, **education**, and **financial services** are typically exempt or zero-rated, which means they are either not subject to VAT or subject to a 0% rate.
A: As a business, you must calculate VAT on all taxable sales of goods and services. You can recover the VAT you pay on your business expenses (input VAT). Businesses must file VAT returns periodically with the **Zakat, Tax, and Customs Authority (ZATCA)**, reporting the VAT charged on sales and the VAT paid on purchases.
A: **eInvoicing** (Fatoora) is a mandatory system for businesses in Saudi Arabia. Since **December 2021**, all businesses must issue electronic invoices for transactions subject to VAT. This system ensures greater tax compliance, reduces fraud, and simplifies the audit process. It also includes the use of **QR codes** on invoices, which improves transparency and accuracy in tax reporting.
