Saudi Arabia has a standard VAT rate of 15%, effective from 1 July 2020.
VAT was introduced in Saudi Arabia at a standard rate of 5% on 1 January 2018. Use the any VAT calculator for historical 5% calculations.
History of VAT in Saudi Arabia
| Effective date | Standard rate |
|---|---|
| 2018, Jan 1 | 5% |
| 2020, Jul 1 | 15% |
In June 2016, the GCC ( Gulf Cooperation Council ) countries – Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman – agreed to impose VAT across the GCC region. In February 2017 Saudi Arabia ratified the GCC VAT framework and on 1st of January 2018 VAT was introduced at a standard rate of 5%.
Why VAT was introduced in Saudi Arabia
Saudi Arabia introduced VAT as part of the GCC VAT framework agreed by the Gulf Cooperation Council countries in 2016. The tax was introduced in Saudi Arabia on 1 January 2018 at a standard rate of 5%, helping diversify government revenue sources.
In 2019, Saudi Arabia opened its borders for tourism and Saudi Arabian government expects tourism will contribute up to 10% of the gross domestic product by 2030, compared with 3% currently. It says by 2030 it aims to attract up to 100m annual visits by both domestic and foreign tourists.
Data source: https://zatca.gov.sa/en/RulesRegulations/VAT/Pages/About-Vat