Start with the right question: are you liable at all? Many small stores are not required to register, must not charge VAT, and are outside e-invoicing entirely. Work out the rate after you know where you stand.
Enter taxable supplies over the last twelve months, or expected over the next twelve. Zero-rated supplies count toward the threshold; exempt supplies do not.
At the 15% standard rate. Consumer prices in Saudi Arabia are expected to be displayed inclusive of VAT.
The most common mistake among small Saudi stores is charging 15% without being registered, in the belief that it is required. The opposite is true: a business below the voluntary threshold cannot register at all, charging VAT without registration is a breach, and a 'tax invoice' issued without a registration number is not a valid document.
The reverse error costs more: crossing the mandatory threshold and delaying registration does not delay the liability, because VAT is due from the date registration became compulsory rather than the date you got around to it.
| Situation | Annual taxable supplies | Outcome |
|---|---|---|
| Resident | Below 187,500 | Cannot register, must not charge |
| Resident | 187,500 – 375,000 | Voluntary |
| Resident | 375,000 and above | Mandatory |
| Non-resident | Any amount | Mandatory, no threshold |
For more on e-invoicing and when it applies, read the ZATCA e-invoicing guide, or the VAT for e-commerce guide.