Guide to Calculating 15% Value Added Tax (VAT) in Saudi Arabia
Value Added Tax (VAT) in the Kingdom of Saudi Arabia was adjusted to 15% effective July 1, 2020, under the administration of the Zakat, Tax and Customs Authority (ZATCA). It is an indirect consumption tax applied to most goods and services throughout the supply chain.
1. Adding 15% VAT to Net Prices
To compute the tax amount on a net price:
VAT Amount = Net Amount ร 0.15
Gross Total = Net Amount ร 1.15
2. Extracting 15% VAT from Gross Prices
When a retail price already includes VAT:
Base Net Price = Gross Total รท 1.15
VAT Amount = Gross Total - Base Net Price
Frequently Asked Questions
The standard VAT rate is 15%, established by ZATCA since July 1, 2020.
Divide the total amount by 1.15 to find the net amount before tax, then subtract the net from the total to get the VAT component.
Certain financial services, life insurance, and qualifying residential real estate lease contracts are exempt under ZATCA regulations.