VAT registration needed before first sale

The situation

Mandatory VAT registration applies when taxable supplies exceed or are expected to exceed SAR 375,000 in 12 months. Below that, voluntary registration is allowed above SAR 187,500.

The law

• Saudi VAT Law and VAT Implementing Regulations, registration rules: Mandatory registration above SAR 375,000 of taxable supplies; voluntary above SAR 187,500; apply within 30 days

What it means for you

A new company can register voluntarily if it expects supplies or expenses above SAR 187,500, which lets it recover VAT on set-up costs. If your first contract is worth more than SAR 375,000, you must register within 30 days. Track monthly so you do not miss the date.

What to do

1. Forecast the next 12 months of taxable sales.
2. Register now if a single contract passes SAR 375,000.
3. Otherwise review monthly.

Late registration costs SAR 10,000.

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