VAT on imports in Saudi Arabia: registration and recovery

How is VAT charged on imported goods?

VAT is charged at 15% on all goods entering the Kingdom. The Zakat, Tax and Customs Authority (ZATCA) treats import as a taxable event separate from any later sale of the goods within the Kingdom. The rate applies regardless of the product's classification or its customs duty rate, even if the goods are exempt from customs duty.

The tax base is the customs value, which includes the price of the goods and the cost of freight and insurance to the port, plus customs duties, excise tax where applicable and any other charges ZATCA collects, but not the VAT itself. ZATCA calculates the amount automatically in the customs declaration, and it must be paid together with the duties before the goods are released.

Exemptions at import are limited. They cover imported goods whose supply in the final country of destination is exempt or zero-rated (such as qualifying medicines and medical equipment and qualifying investment metals); exemptions under the Common Customs Law, such as diplomatic and military exemptions and returned goods; and non-commercial personal effects carried by travelers up to a value of SAR 3,000. Any item that is only exempt from customs duty, or subject to a zero duty rate, is generally subject to VAT at import. For goods placed under a suspensive customs regime (customs warehouse, transit or duty-free shop), VAT is suspended and becomes due when the goods are released for free circulation, and guarantees may be required.

To estimate the amount before shipping, use the duty and tax calculator. For the customs details, see our article on customs duties and VAT on imports.

Who must register for VAT?

Registration is mandatory for anyone whose taxable supplies exceed SAR 375,000 over twelve months, and optional for anyone whose taxable supplies or taxable expenses exceed SAR 187,500 over the same period. These figures appear in ZATCA's guideline on imports and exports (Version 2, May 2026).

• What does not count toward the mandatory threshold: exempt supplies, supplies outside the scope of VAT in the GCC states, and proceeds from selling capital assets.
• Voluntary registration: ZATCA favors it for businesses that want to recover VAT paid on their expenses before they start issuing invoices. It is useful for a first-time importer that has not yet made any sales.
• Non-residents: They must register regardless of the value of their supplies if they are required to pay VAT in the Kingdom.

Importing alone does not oblige you to register. An unregistered importer pays import VAT in the customs declaration and cannot deduct it. Registration is done online through the VAT services on the ZATCA portal (zatca.gov.sa), and a VAT account number is issued on registration.

How does a registered importer recover import VAT?

A registered importer recovers import VAT by deducting it as input tax in its VAT return from the VAT it collected on its sales. To do this, it must be the importer named in the customs documents, and the goods must be used in its taxable activity. If input tax exceeds output tax, a credit balance arises, which can be claimed as a refund after filing the return or within the following five years.

Illustrative example with hypothetical figures, continuing from the numbers above: if you sell the imported goods for SAR 130,000 before VAT, output tax is SAR 19,500. You deduct the import VAT of SAR 15,750, leaving SAR 3,750 payable in the return.

1. Before release, make sure the customs declaration is issued in your name and with your tax identification number (TIN), not in the name of another party.
2. Pay the calculated VAT with the duties, and keep the customs declaration and payment documents.
3. Check the record of VAT paid on your imports in the taxpayer portal, where ZATCA makes these records available.
4. Include the VAT as input tax in the return for the period, and apply proportional deduction if you have exempt supplies alongside taxable ones.
5. Keep the records for audit, as you may be asked to support the deduction.

If there is a classification or valuation error in the declaration, notify ZATCA before paying. If an amount has been overpaid, ZATCA does not refund it in cash; instead, you can deduct it as input tax in your return.

Can import VAT be deferred to the VAT return?

Yes. The VAT system allows a registered business to ask ZATCA to approve paying import VAT through its return instead of when the goods enter. As a rule, however, the VAT calculated in the customs declaration must be paid unless this approval has been granted. Deferred VAT is reported in box 9 of the return instead of box 8, which covers VAT paid to ZATCA.

The conditions for approval, as set out in ZATCA's guideline, include:

• Your tax period is monthly and you import at least once every month.
• Your returns and payments over the last twelve months, or any shorter period since you registered, were made on time, and you meet your other tax obligations.
• You provide evidence of your financial stability.

ZATCA may reject the application or cancel an existing approval if it sees a risk that the VAT will not be paid or if the business fails to meet a tax obligation. Applications follow a procedure issued by ZATCA, so ask ZATCA (unified number 19993) or your tax adviser for the details before building your cash flow around deferral.

Reverse charge: when does it apply?

The reverse charge mechanism applies to services you receive from a non-resident supplier, not to goods cleared through customs. You account for the VAT yourself, report it in box 9 of the return, and deduct it if you are entitled to. You do not issue a tax invoice to yourself, but keep the supplier's invoice. If you buy equipment from a non-resident supplier who installs it at your premises, import VAT is paid on release, and at the same time you account for VAT on the supplier's supply (including installation) under the reverse charge. You then deduct both if you are entitled to.

What invoices, records and returns are required after registration?

After registering, you must issue a tax invoice for every taxable supply, file periodic returns and keep records for at least six years. Records include issued and received invoices, books, contracts, bank statements, and import, export and shipping documents.

• Invoices: Issue a tax invoice to registered customers. A simplified invoice is allowed if the value is under SAR 1,000 or the customer is an end consumer. The invoice shows your tax number, the taxable amount, the rate and the VAT amount.
• E-invoicing (FATOORA): Businesses subject to the e-invoicing regulation must issue electronic invoices for every transaction that requires a tax invoice. Phase one started on 4 December 2021 and phase two (integration) on 1 January 2023. Follow the FATOORA platform on ZATCA's website to find out your business's requirements and when they apply to it.
• Returns: The tax period is three months for most businesses and mandatorily monthly for those with annual revenue above SAR 40 million. The return is filed and net VAT paid by the last day of the month following the end of the period.
• Correcting errors: If an error results in a net tax difference of more than SAR 15,000, notify ZATCA within 20 days of becoming aware of it. Smaller errors are corrected in the next return.

ZATCA imposes penalties for late filing or payment and for errors in returns. The rates vary by violation and may change, so check the current rates on ZATCA's website before relying on any figure.

How are exports treated for VAT?

Exports of goods outside the GCC territory are zero-rated, provided you keep documents proving that the goods left. These include export documents issued by ZATCA, commercial documents showing the customer's identity and the place of delivery, and transport documents such as the bill of lading. You must obtain them within 90 days of the date of supply; otherwise the transaction is treated as a domestic supply at 15%.

Input tax on the exporter's costs remains deductible, and a refund of a credit balance can be claimed when filing the return. For the customs details, see export procedures from Saudi Arabia.

What common mistakes cost importers their right to deduct?

Most losses come from incorrect data in the customs declaration or from missing documents, not from the complexity of the system itself. The table below summarizes the mistakes, their consequences and how to avoid them.

VAT applies to all imports, even those for personal use, but deduction is available only for goods used in a taxable activity. If a customs agent or intermediary imports goods in its own name, the party eligible to deduct is the importer named in the customs documents. In the example ZATCA gives, the agent could not deduct the VAT because the goods were not part of its business. Agree on the treatment with your adviser in advance.

What does the customs broker do, and what does the tax adviser do?

The customs broker handles the customs declaration and the release of the shipment. The tax adviser handles your rights and obligations under the VAT system. Their roles complement each other, but one cannot replace the other.

Frequently asked questions