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Saudi Arabia: Proposed addition to VAT Implementing Regulations

19 September, 2022

In brief

The Zakat, Tax and Customs Authority (‘ZATCA’) has proposed to add a new Article to the VAT Implementing Regulations related to applying a zero VAT rate  on local supplies of “qualified military goods”. 

The proposed addition was published on the Public Consultation Platform of the National Competitiveness Center on 13 September 2022.

Interested stakeholders and taxpayers are encouraged to express their opinion on this platform and share feedback on the proposed amendment no later than 15 October 2022.

In detail

A new Article 36 under Chapter Six (VAT zero-rated supplies) to the VAT Implementing Regulations has been proposed by ZATCA prescribing the application of a zero VAT rate on local supplies of qualified military goods to armed and security forces of the Government.

Qualified military goods, as defined in the proposed addition, includes:

  • Locally manufactured goods; and

  • Goods that are certified by the General Authority for Military Industries confirming that the supply fulfilled all the prescribed requirements and conditions 

Supplies of military goods that do not meet the prescribed requirement will be subject to standard 15% VAT rate.

The Governor of ZATCA, in coordination with the General Authority for Military Industries, may issue any additional conditions related to the application of the provisions of this article.

"The proposed new article is aiming to ease administrative burden of claiming refund of VAT incurred by the relevant armed and security forces management authorities on procuring domestic goods and services."

Tax and Legal Services PwC Middle East

The Takeaway

The public consultation forum presents a unique opportunity for interested stakeholders to share views and highlight any suggestions regarding the proposed amendments.

Any feedback should be shared with ZATCA no later than 15 October 2022 through the prescribed channel.


Contact us

Mohammed Yaghmour

Middle East Tax & Legal Services Leader, PwC Middle East

Tel: +966 56 704 9675

Mohammed Al-Obaidi

Zakat and Tax Leader, PwC Middle East

Tel: +966 50 525 6796

Chadi Abou Chakra

Middle East Indirect Tax Network Leader, PwC Middle East

Tel: +966 11 211 0400 Ext: 1858

Guido Lubbers

Partner - Indirect tax and fiscal policy, PwC Middle East

Tel: +966 54 110 0432

Hafez Yamin

Partner, Indirect Tax, PwC Middle East

Tel: +966 54 033 7096

Mohamad Najjar

Partner, Indirect Tax , PwC Middle East

Tel: +966 56 367 9392

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