VAT in Saudi Arabia is 15% and is administered by ZATCA. An online seller must register once taxable supplies exceed the mandatory threshold ZATCA publishes, and may register voluntarily at a lower threshold. Once registered, you show consumer prices including VAT, issue Fatoora-compliant e-invoices (simplified with a QR code for consumers, standard tax invoices for businesses), and file returns on time. This is general information, not tax advice.
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Do online stores in Saudi Arabia charge VAT?
Yes. VAT for online sellers in Saudi Arabia is the same VAT that applies to any business: 15% on taxable supplies, administered by the Zakat, Tax and Customs Authority (ZATCA). Selling online neither exempts you nor changes the rate. The real questions are when you must register, and how to show prices and issue invoices once you do.
This guide answers in a store owner's language rather than an accountant's, focusing on daily situations: product prices, delivery fees, coupons, instalments, cash on delivery and refunds.
| Item | In short |
|---|---|
| Rate | 15% |
| Authority | Zakat, Tax and Customs Authority (ZATCA) |
| Registration | Mandatory above a threshold ZATCA publishes; voluntary at a lower one |
| Consumer prices | VAT-inclusive |
| Invoices | Fatoora-compliant e-invoices: simplified for consumers, standard for businesses |
| Returns | Periodic, as ZATCA assigns to your business |
When do you need to register for VAT?
Registration depends on the value of your taxable supplies over 12 months. ZATCA publishes two thresholds: one for mandatory registration and a lower one for voluntary registration. At the time of writing, ZATCA's published thresholds are SAR 375,000 for mandatory and SAR 187,500 for voluntary registration; confirm them on ZATCA's website before you decide.
- You sell to companies that want a tax invoice with your VAT number
- You pay significant VAT on purchases and expenses and want to recover it under the rules
- You expect to cross the mandatory threshold soon and want to prepare early
- Your sales are small and your customers are all individuals
- You are not yet ready for e-invoicing and periodic returns
- Adding VAT would weaken your price against unregistered competitors
How do you show prices and calculate VAT in your store?
Once registered, prices shown to consumers in Saudi Arabia include VAT. The customer sees one final price, and the invoice shows how much of it is VAT. The simplest formula: VAT inside a VAT-inclusive price = inclusive price × 15 ÷ 115.
| Example | Inclusive price | Before VAT | VAT amount |
|---|---|---|---|
| Perfume | SAR 115 | SAR 100 | SAR 15 |
| Delivery fee | SAR 23 | SAR 20 | SAR 3 |
| 10% coupon on the perfume | SAR 103.50 | SAR 90 | SAR 13.50 |
- Delivery fees: what you charge the customer for delivery is generally part of the taxable supply, so do not treat it as outside the invoice.
- Discounts and coupons: VAT is calculated on the discounted price the customer actually pays.
- Free gifts and samples: these can have special treatment in some cases; ask your accountant.
- Rounding: have your system calculate VAT per line and then total it, so the invoice matches what the customer paid.
Once registered, show your VAT number in the store footer and on every invoice, and add a short note next to prices such as 'Prices include VAT'. These small details reassure consumers, and reassure business buyers who need a correct tax invoice to recover their own VAT.
Invoices: simplified or standard tax invoice?
Every registered business has issued invoices electronically through a compliant solution since 4 December 2021, and connects to the Fatoora platform when its Phase 2 wave arrives. In an online store you will usually deal with two types:
| Item | Simplified invoice | Standard tax invoice |
|---|---|---|
| For | Individual consumers | A business buying from you |
| Key content | Seller name and VAT number, date, items, inclusive total, VAT amount, QR code | All of that plus the buyer's name, VAT number, address and fuller detail |
| In Phase 2 | Reported to the platform | Cleared before sharing |
If your VAT-subject revenue exceeded SAR 187,500 in any year from 2022 to 2025, you may be in Wave 25 with an integration deadline of 1 February 2027. Read ZATCA e-invoicing phases and the Wave 25 checklist.
Instalments, cash on delivery and refunds: how does VAT work?
These are the situations that confuse store owners most. The general rule: VAT follows the sale to the customer, not the route the money takes to reach you.
| Situation | General treatment |
|---|---|
| Paying in instalments via Tabby or Tamara | Invoice the customer for the full sale price and its VAT; the BNPL provider's fee is your expense with its own invoice |
| Cash on delivery | Invoice for the full order value; watch the timing of issue and refused deliveries |
| Payment gateway fees | Your expense, invoiced to you by the gateway and treated under input VAT rules |
| Full or partial refund | A credit note linked to the original invoice reduces the VAT due |
| Order cancelled before payment | No invoice if none was issued; if one was, issue a credit note |
For the operational side of each payment method, read Tabby and Tamara for Saudi merchants and Cash on delivery vs online payment.
Returns and records: a simple monthly routine
ZATCA assigns each business a filing frequency, monthly or quarterly depending on its size. What makes filing easy is keeping your data clean throughout the period, not gathering it on the last day.
- 1Export invoices and notes
From your store's admin panel for the whole period, with total VAT collected.
- 2Collect purchase invoices
Stock, shipping, ads, gateway fees, subscriptions. Keep them electronically.
- 3Reconcile with your bank
Match payouts from the gateway, BNPL providers and carriers against invoices to catch any order without an invoice.
- 4Review with your accountant and file
Days before the deadline, not on the day.
Common VAT mistakes among online sellers
- Measuring the threshold on profit, not sales: the registration threshold is based on the value of taxable supplies, not net profit after expenses.
- Forgetting side channels: WhatsApp and Snapchat orders and seasonal pop-ups count toward your sales just like store orders.
- Invoicing under someone else's name: invoices are issued in the registered business's name and VAT number, not the store platform's or the carrier's.
- Ignoring refunds: refunds without a credit note leave the VAT in your return higher than it should be.
VAT does not exhaust an organized store; it exhausts the store that gathers its invoices on the last day.
Make your store calculate VAT and invoice automatically
All of the above becomes easy when the system does it, not a staff member: inclusive prices, VAT per line, an invoice on payment, a credit note on refund, and a monthly report ready for your accountant.
Set up VAT in my store: all prices are entered and shown in SAR including 15% VAT, with a field per product marking whether it is taxable. Calculate VAT per line, on delivery fees, and after coupons are applied. Issue a simplified invoice with a QR code when payment is confirmed (mada, Apple Pay, Tabby, Tamara) or when a cash-on-delivery order is delivered, and a standard tax invoice if the customer enters a VAT number. Refunds issue a credit note linked to the invoice. Add a monthly admin report with total sales, VAT collected and notes, exportable. Show me the plan before building.
Try it in FanannYour next step: total your taxable sales for the last 12 months today and compare them with ZATCA's thresholds. If you are just starting out, follow How to start an online store in Saudi Arabia.
Key takeaways
- The rate is 15%, and registration depends on your taxable supplies against thresholds ZATCA publishes.
- Once registered, show consumer prices including VAT; never add it at checkout.
- Delivery fees, discounts, instalments and refunds all affect VAT, so set them up correctly in your system.
- Every invoice is issued electronically from a compliant solution, and corrections use credit or debit notes.
- Always verify with ZATCA and ask your accountant about your specific case.
Frequently asked questions
When must an online store register for VAT in Saudi Arabia?
Is the delivery fee subject to VAT?
Should I show prices before or after VAT?
How do I calculate VAT from a VAT-inclusive price?
Does paying in instalments change the VAT?
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