VAT at 15% and e-invoicing (Fatoorah)
VAT is the tax a Saudi company handles most often — and it now comes with a hard technology requirement. Here's the rate, the registration thresholds, and what Fatoorah's two phases actually demand.
15% — with a threshold that decides when you register
Standard VAT is 15% on most goods and services; exports are typically zero-rated, and some supplies — certain financial services and residential leasing — are exempt. Whether you must register depends on your annual taxable supplies.
| Annual taxable supplies | VAT registration |
|---|---|
| SAR 375,000 or more | Mandatory |
| SAR 187,500 – 375,000 | Voluntary |
| Below SAR 187,500 | Not eligible to register |
Returns are filed monthly for larger taxpayers and quarterly for smaller ones.
Generation, then integration
Structured e-invoices
- All VAT-registered businesses must issue & store structured electronic invoices
- No more free-form PDFs or paper
- Invoices must carry the required fields and a QR code
Real-time clearance
- Your system connects directly to ZATCA's platform
- B2B & B2G invoices cleared in real time before they reach the buyer
- B2C simplified invoices reported within 24 hours
- Businesses brought in by revenue, in waves, with advance notice
Issue, clear, then share
Generate
Your compliant system creates the invoice in ZATCA's required format, with the mandated fields.
Clear
For B2B and B2G, the invoice is sent to ZATCA and cleared in real time — cryptographically stamped and QR-coded.
Share
Only then is the cleared invoice issued to the buyer. B2C simplified invoices are reported to ZATCA within 24 hours.
Your invoicing system has to connect to ZATCA and clear invoices as you issue them. If your billing software isn't compliant, you simply can't invoice — which is why this is an IT project as much as a tax one.
Four things, every cycle
A compliant, integrated solution
E-invoicing software connected to ZATCA and kept current with its technical requirements.
Correct VAT treatment
The right rate per supply — standard, zero-rated or exempt — applied consistently.
Timely returns
Monthly or quarterly filings, reconciled to your cleared invoices.
Compliant intercompany invoicing
Group charges into the Saudi entity must be Fatoorah-compliant too — a common gap when a foreign parent bills locally.
Questions we get asked first
What is the VAT rate in Saudi Arabia?
15% on most goods and services since 2020, when it rose from 5%. Exports are typically zero-rated, and some financial services and residential leasing are exempt.
When must I register for VAT?
Registration is mandatory once annual taxable supplies exceed SAR 375,000, and voluntary between SAR 187,500 and SAR 375,000. Below SAR 187,500 you cannot register.
What is Fatoorah?
Saudi Arabia's mandatory e-invoicing system, rolled out in two phases: Phase 1 (Generation) since December 2021, and Phase 2 (Integration) in revenue-based waves since January 2023.
What does Phase 2 actually require?
Your invoicing system must connect to ZATCA and clear B2B and B2G invoices in real time before they reach the buyer, with B2C simplified invoices reported within 24 hours. Non-compliant software can't issue valid invoices.
Does it apply to intercompany invoices?
Yes. Group charges billed to the Saudi entity must be Fatoorah-compliant, which is a frequent gap when a foreign parent invoices its Saudi company.
Treat VAT as a systems question, not just an accounting one
The rate is simple; the machinery around it is where compliance now lives. Get the registration threshold right, put a compliant, ZATCA-connected invoicing solution in place, apply the correct treatment per supply, and file on time. It's highly automatable — which is exactly where dependable back-office support earns its keep.
Need VAT and Fatoorah handled properly?
We set up compliant e-invoicing, get the VAT treatment right per supply, and run the returns for you.
Speak to an Advisor →Related reading
This article is general information, current as of 2026, and is not legal or tax advice for any specific situation. Confirm current thresholds and e-invoicing waves with ZATCA before acting.