How to Calculate a Saudi VAT Return: A Worked Example with Imports and Exports

An illustrative quarterly VAT return for a Saudi company, covering standard-rated sales, zero-rated exports, blocked input VAT, import VAT and reverse charge.

A Saudi VAT return subtracts recoverable input VAT from output VAT for the period, with the difference paid to ZATCA or carried forward as a credit. The published headline rate is 15 per cent, confirmed by ZATCA for each supply type. The example uses illustrative figures to show how exports, imports, blocked costs and services bought from abroad each change the result.

The situation

A Saudi trading and services company files quarterly. In one quarter it sold goods in the Kingdom and abroad, bought goods and services locally, imported goods and paid a foreign consultant. It wants to calculate the net VAT payable correctly.

Assumptions (illustrative)

• Standard-rated sales in the Kingdom: SAR 2,000,000 before VAT.
• Exports qualifying for zero rating, with export evidence held: SAR 500,000.
• Local standard-rated purchases: SAR 1,220,000 before VAT, of which SAR 20,000 is entertainment on which input VAT is blocked.
• Imports: customs value plus duty of SAR 400,000, with import VAT paid at customs.
• Services from a foreign consultant with no Saudi VAT registration: SAR 100,000.
• VAT at the published headline rate of 15 per cent; the company makes only taxable supplies.

Step 1: Output VAT on local sales

SAR 2,000,000 multiplied by 15 per cent equals SAR 300,000.

This is VAT the company charged customers and collected on their behalf.

Step 2: Output VAT on exports

SAR 500,000 multiplied by 0 per cent equals SAR 0.

Zero rating means no VAT charged but the right to recover input VAT is kept. Without export evidence, ZATCA can treat the sale as standard-rated.

Step 3: Recoverable input VAT on local purchases

SAR 1,220,000 minus SAR 20,000 equals SAR 1,200,000; multiplied by 15 per cent equals SAR 180,000.

The SAR 3,000 of VAT on entertainment is excluded because the regulations block it. Every other claim needs a valid tax invoice in the company's name.

Step 4: Import VAT

SAR 400,000 multiplied by 15 per cent equals SAR 60,000, recoverable as input VAT.

The VAT was paid to customs at import and is reclaimed through the return, supported by the customs declaration in the company's name.

Step 5: Reverse charge on the foreign service

SAR 100,000 multiplied by 15 per cent equals SAR 15,000 declared as output VAT and SAR 15,000 claimed as input VAT.

For a fully taxable business the net effect is zero, but both sides must appear in the return. Withholding tax on the same payment is a separate obligation.

Step 6: Net VAT payable

Output SAR 300,000 plus SAR 15,000 equals SAR 315,000; input SAR 180,000 plus SAR 60,000 plus SAR 15,000 equals SAR 255,000; net payable SAR 60,000.

This amount is paid with the return by the deadline. If input had exceeded output, the credit could be carried forward or claimed under ZATCA's refund procedure.

What changes the answer

• If export evidence is missing, the SAR 500,000 could be treated as a local sale, adding SAR 75,000 of output VAT.
• If some supplies were exempt, part of the input VAT would need to be apportioned and would not be fully recoverable.
• An invoice from a supplier that is not compliant with e-invoicing rules can put its input VAT claim at risk.
• If the foreign service had been left out, the return would be understated on both sides and penalties could apply even though the net was zero.
• Large refund positions often trigger a review before payment.

What the numbers tell you

• Keep export evidence and customs declarations with the return that relies on them.
• Code blocked expenses separately in the ledger so they never enter the input VAT claim.
• Record reverse-charge services in every period, even when the net effect is zero.
• Have a licensed adviser review unusual transactions before the return is filed.

Limits of this example

Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.

Domira works with foreign investors on the property side of entering Saudi Arabia: finding land or premises, due diligence, design, construction and asset management. For licensing, tax and legal steps, work with a licensed adviser; we coordinate with yours so the property decision fits the structure you choose.