As of July 1, 2020, the value-added tax (“VAT”) rate in Saudi Arabia increases from 5% to 15%.

Saudi Arabia’s Value-Added Tax Law (the “VAT Law”) was published in 2017 and came into effect on January 1, 2018. According to Article 2 of the VAT Law and Article 14 of the Value- Added Tax Implementing Regulations (the “VAT Regulations”), all imports and supplies of goods and services in the KSA are subject to VAT, except for zero-rated and exempt categories. Prior to the VAT rate increase, the standard VAT rate was 5%. The VAT Law is now amended to include the new rate, 15%.

As a measure to mitigate the negative financial and economic impact of COVID-19 on the government budget, the Saudi government announced on May 11, 2020 the increase to the VAT rate. On June 25, 2020, the General Authority of Zakat and Tax (“GAZT”) issued its guidelines for the VAT increase. The rate increase is applicable to all imports and supplies of goods and services subject to the 5% rate. The zero-rated and exempt categories will not be affected.