VAT registration threshold in Saudi Arabia: when your company must register

The VAT registration threshold in Saudi Arabia is SAR 375,000 of taxable supplies over 12 months, and voluntary registration opens at SAR 187,500. The test is run at the end of every month, looking back and looking ahead, and you then have 30 days to apply. This page sets out the exact rule from ZATCA's Implementing Regulations, the position of non-residents and a worked example.

Discuss my project Message us on WhatsApp

Mandatory registration threshold: SAR 375,000 / 12 months1
Deadline to apply: 30 days after month end2
Fine for failing to register: SAR 10,0003

Plate I. Aerial view of a container terminal with cranes and stacked containersPhoto : CHUTTERSNAP / Unsplash

In brief

A resident business in Saudi Arabia must register for VAT when its taxable supplies exceed SAR 375,000 over the past 12 months, or are expected to exceed that amount over the next 12 months.
With taxable supplies or expenses of at least SAR 187,500, registration is voluntary; below SAR 187,500 a business cannot register (ZATCA thresholds checked in September 2026).
The test is run at the end of each month; once the threshold is crossed, the application is due within 30 days of the end of that month (VAT Implementing Regulations, Articles 3 and 4).
A non-resident that is itself liable to pay VAT on a supply in Saudi Arabia has no threshold: it must register within 30 days of its first taxable supply (Article 5).
Failing to register carries a SAR 10,000 fine, plus the VAT due from the date registration should have taken effect and a 5% penalty for each month of late payment.

VAT registration threshold in Saudi Arabia: mandatory, voluntary or not allowed?

It all turns on the value of taxable supplies made in Saudi Arabia over a 12-month period. The threshold comes from the GCC VAT Agreement and is published by ZATCA, the Zakat, Tax and Customs Authority.

Table 1

Taxable supplies over 12 months	Position	Legal basis
Above SAR 375,000 (actual or expected)	Mandatory registration	Implementing Regulations, Articles 3 and 4
At least SAR 187,500 of taxable supplies or expenses	Voluntary registration available	Article 7
Below SAR 187,500	Registration not allowed	Article 7 (voluntary threshold not met)
Non-resident liable to pay VAT on a supply	Mandatory registration, no threshold	Article 5

Amounts in Saudi riyals (SAR 3.75 = USD 1). Thresholds checked on zatca.gov.sa on 23 September 2026. For the rate, returns and e-invoicing, see our guide to VAT and ZATCA.

How the SAR 375,000 threshold is calculated

The regulations set two tests, repeated at the end of every month until the business is registered. The historic test adds up supplies over the 12 months just ended. The forward-looking test estimates supplies over the next 12 months. If either one exceeds SAR 375,000, the obligation arises.

Supplies taxed at 15% count, and so do zero-rated supplies such as exports. Exempt supplies do not count, mainly certain financial services and residential leases, and neither does the sale of a capital asset used in the business (Article 6, paragraph 5).

Two special cases. A business making only zero-rated supplies is excluded from mandatory registration even above the threshold, although it may register voluntarily (Article 9). And where related persons carry on similar or linked activities, ZATCA can require their turnover to be combined for the threshold test.

For a new company it is often the forward-looking test that bites first. If your business plan shows more than SAR 375,000 of sales in year one, the obligation can arise at the end of your very first month of trading.

Checking the threshold every month: a four-step routine

Registration is free and done online on the ZATCA portal once the company is on the commercial register (see company formation).

1
Add up the last 12 months
Standard-rated and zero-rated supplies made in Saudi Arabia, leaving out exempt supplies and disposals of capital assets.
Qui
You or your accountant
Durée
Each month end
2
Estimate the next 12 months
Signed contracts, orders and forecast. Keep a written record of the estimate: it supports the date you chose if ZATCA asks.
Qui
You or your accountant
Durée
Each month end
3
Apply within 30 days
On zatca.gov.sa, VAT registration service. You will need the commercial registration, national address, activity, IBAN, turnover and the effective date requested. ZATCA may ask for evidence and must give at least 20 days to provide it.
Qui
Company representative
Durée
30 days after the month the threshold is crossed
4
Receive the certificate and charge VAT
The certificate shows the effective date and the tax number, and must be displayed at your premises. From that date your invoices carry 15% VAT and follow the e-invoicing rules.
Qui
ZATCA, then you
Durée
From the effective date

Registration deadline and effective date by situation

The effective date matters as much as the deadline: VAT is due on your sales from that date.

Table 2

Situation	Deadline to apply	Effective date of registration
Threshold exceeded over the past 12 months (Article 3)	30 days after the end of the month it was exceeded	First day of the month after the application is filed
Threshold expected over the next 12 months (Article 4)	30 days after the end of the month the forecast exceeds it	First day of the first month in which annual supplies were expected to exceed the threshold
Non-resident liable to pay VAT (Article 5)	30 days after the first taxable supply	Date of that first supply
Voluntary registration (Article 7)	No deadline	Date set by the regulations, or an earlier or later date agreed by ZATCA
No application filed (Article 6)	ZATCA may register you on its own motion	Date on which registration should have taken effect

ZATCA may agree to a later effective date, no later than the start of the month after the application, or an earlier one if you already qualified (Article 6). How the effective date applies under the forward-looking test should be confirmed with your accountant when you file.

Non-residents: registration from the first taxable supply

The SAR 375,000 threshold applies only to residents. A foreign business with no establishment in Saudi Arabia that is itself liable to pay VAT on a supply made or received in the Kingdom must register within 30 days of that first supply, whatever its value, with effect from the date of the supply (Article 5).

For most business-to-business services, the VAT-registered Saudi customer accounts for the VAT under the reverse charge: the foreign supplier is not liable and does not need to register. The obligation mainly concerns sales to consumers or unregistered customers, and some supplies of goods located in the Kingdom.

A non-resident may appoint a tax representative approved by ZATCA, who becomes jointly liable for the VAT due. If you set up a Saudi subsidiary, the subsidiary is resident and the SAR 375,000 threshold applies to its own sales.

Worked example: when does a consulting company have to register?

Illustrative example only: a consulting LLC owned by a foreign shareholder starts trading on 1 March 2026 and invoices SAR 35,000 a month, excluding VAT, to Saudi clients from its first month, under signed annual contracts.

Table 3

Test	Calculation	Result
Forward-looking, end of March 2026	12 × 35,000 = SAR 420,000 expected	Threshold exceeded: apply by 30 April 2026
Historic, end of August 2026	6 × 35,000 = SAR 210,000 made	Voluntary threshold met, mandatory threshold not met
Historic, end of January 2027	11 × 35,000 = SAR 385,000 made	Threshold exceeded, but the obligation already existed from March 2026
Cost of missing it, discovered in February 2027	VAT on about SAR 315,000 of sales, plus fines	≈ SAR 41,000 to 47,000 of VAT, a SAR 10,000 fine and 5% a month for late payment

Illustrative figures, not a real client. VAT that was never invoiced is still due: SAR 47,250 if prices are treated as VAT-exclusive (15% of 315,000), about SAR 41,100 if treated as VAT-inclusive (15/115). The exact treatment depends on your contracts and should be settled with your accountant.

Penalties for late VAT registration

ZATCA's official schedule (“Taxation Violation Fines” page, updated on 30 August 2026).

Table 4

Breach	Fine
Failure to apply for VAT registration	SAR 10,000
Failure to pay VAT when due	5% of the unpaid VAT for each month or part of a month
Failure to file a return on time	5% to 25% of the VAT that should have been declared
Issuing a tax invoice while unregistered	Up to SAR 100,000

Fines may be doubled for a repeat offence within 3 years. The penalty waiver initiative, extended to 31 December 2026, excludes returns due after 30 June 2026, so a new company cannot rely on it (details in our guide to VAT and ZATCA).

What if turnover drops below the threshold?

A registered business may apply to deregister when its supplies over the past 12 months and those expected over the next 12 months do not exceed SAR 375,000. It must apply, within 30 days, if it stops trading, or if its supplies or expenses stay below SAR 187,500 over 12 months and below SAR 375,000 over 24 months and are expected below SAR 187,500 over the next 12 months (Article 13).

Voluntary registration is a commitment of at least 12 months: unless the business ceases, it cannot apply to deregister before then. Weigh this before registering early to recover VAT on start-up costs.

Frequently asked questions

What is the VAT registration threshold in Saudi Arabia in 2026?

Registration is mandatory above SAR 375,000 of taxable supplies over 12 months and voluntary from SAR 187,500. The thresholds have not changed since VAT was introduced in 2018 and are published by ZATCA (checked in September 2026).

How long do I have to register after crossing the threshold?

30 days from the end of the month in which the threshold was exceeded, or in which your supplies over the next 12 months became expected to exceed SAR 375,000. For a non-resident, the 30 days run from the first taxable supply.

Do exports count towards the SAR 375,000 threshold?

Yes. Zero-rated supplies, including exports, are included. Exempt supplies such as certain financial services and residential leases are not. A business whose supplies are all zero-rated is, however, excluded from mandatory registration.

Does a foreign company without a Saudi entity need to register for VAT?

Only if it is itself liable to pay VAT on a supply in Saudi Arabia, typically sales to consumers. In that case there is no threshold and registration is due within 30 days of the first supply. When the customer is a VAT-registered Saudi business, that customer usually accounts for the VAT under the reverse charge.

Can I register for VAT before reaching SAR 375,000?

Yes, once your taxable supplies or expenses reach SAR 187,500 over the past 12 months, or are expected to over the next 12. It lets you recover VAT on start-up purchases, but voluntary registration commits you for at least 12 months.

What happens if I register late?

A SAR 10,000 fine, VAT on sales made since the date registration should have taken effect, even if you never charged it to customers, and a 5% penalty for each month of late payment. ZATCA can also register you on its own motion.

Is there a fee for VAT registration?

No, the ZATCA service is free. The costs are bookkeeping, e-invoicing software and any support you use. For the full set-up budget, see our page on company formation costs.

Notes and sources

Information verified in September 2026. Amounts and timelines are observed ranges provided for information only. Government fees are set by Saudi authorities and may change: we confirm them in writing before you commit to anything.

Has your forecast already crossed the threshold?

Send us your actual and expected sales: we work out with you the month the obligation arises and prepare the registration file for your accountant to sign off. A free 30-minute first call, and a reply within one working day.

Message us on WhatsApp Discuss my project

Free 30-minute first call
Reply within one business day
No commitment