On April 23, 2025, the Saudi Zakat, Tax, and Customs Authority (ZATCA) released an updated VAT Guide that clarifies recent amendments to the VAT Executive Regulations. These amendments, part of Board Resolution No. (01-06-24), were published in the Official Gazette on April 18, 2025, and took effect immediately, except for Article 47(3), which will be effective from January 1, 2026.
Key updates in the guide include:
- Tax Group Registration: New conditions for tax group registration require that each member must be VAT-eligible, have a fixed business location in Saudi Arabia, and fulfill certain voluntary registration criteria. Additionally, a majority (at least 50%) of the capital, voting rights, or market value must be controlled by the same legal entity. Members cannot be licensed in special customs zones or part of another tax group, and they must not be eligible for VAT refunds, with some exceptions. Existing tax groups have six months to comply with these new requirements.
- Transfer of Economic Activity: Transfers of business that encompass all necessary tangible and intangible assets are not considered taxable supplies, provided the recipient is VAT-registered and both parties agree to this treatment. Transfers must be reported to ZATCA within a month using a designated form. If conditions are not met, the transfer will be deemed a taxable supply.
- Electronic Marketplaces: The guide defines an electronic marketplace for VAT purposes as a platform enabling suppliers to offer goods or services. However, platforms that merely process payments or redirect customers without facilitating actual purchases are not subject to VAT. Starting January 2026, electronic marketplaces facilitating transactions for unregistered resident suppliers will be treated as having purchased and resold goods or services, thus becoming liable for VAT.
- Additional Updates: The guide also addresses changes related to the cessation of economic activity, the scope of service supplies, and VAT deductions related to goods under financing contracts.
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Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
