Saudi Arabia Clarifies VAT Deemed Supplier Rules for Electronic Marketplaces

The expanded deemed supplier provisions under Article 47(3) of the VAT Implementing Regulations will take effect on January 1, 2026. These changes follow amendments published by the Zakat, Tax and Customs Authority (ZATCA) in April 2025.

What Are Deemed Supplier Rules?

Under Saudi VAT law, an electronic marketplace can be treated as the supplier for VAT purposes when it facilitates the sale of goods or services. This means the platform is considered to have purchased and resold the items in its own name, making it responsible for VAT compliance.

When Does a Marketplace Become a Deemed Supplier?

A platform is deemed to facilitate a supply if it controls key aspects of the transaction, such as:

• Setting pricing or payment terms
• Collecting payment
• Managing contractual terms
• Handling fulfillment or delivery
• Providing customer service or refunds
• Using its trademark on the supply

If these conditions apply, the marketplace must:

• Register for VAT (if applicable)
• Issue VAT-compliant invoices
• Maintain records
• File VAT returns and remit tax to ZATCA

Exceptions: When Rules Do NOT Apply

The deemed supplier rules do not apply if the platform only:

• Processes payments
• Provides advertising or listing services
• Redirects customers to another site without facilitating the actual supply

Special Focus: Non-Resident and Non-Registered Suppliers

• Non-Resident Suppliers: Marketplaces facilitating supplies for non-resident sellers will assume VAT obligations unless the seller is clearly identified and the platform does not control transaction terms.
• Non-VAT Registered Resident Suppliers: Similar rules apply if the seller is resident but not VAT-registered.

Impact on Marketplaces

Marketplaces must update their systems to:

• Verify seller residency and VAT registration status
• Adjust contracts and processes to reflect compliance obligations
• Ensure proper VAT treatment of commissions, service fees, discounts, and refunds

Why This Matters

These changes align Saudi VAT rules with global trends in e-commerce taxation, ensuring better compliance and reducing VAT leakage in the digital economy.

Key Sources

• PwC: Amendments to VAT Implementing Regulations [pwc.com]
• Dhruva Consultants: ZATCA Guidance on Deemed Supplier Obligations [dhruvacons…ltants.com]
• VATCalc: Saudi Arabia Marketplace VAT Rules [vatcalc.com]
• GCC Tax Laws: Article 9 and Article 47 [gcctaxlaws.com]