Article 2 of the Saudi Value Added Tax Law
المادة 2 من نظام ضريبة القيمة المضافة · الفصل الأول: أحكام تمهيدية
The article imposes value added tax on the import and supply of goods and services at a basic rate of 15%, unless an exemption or zero rate applies.
Official text after amendments (Arabic)
Compiled from the original text and every officially published amendment; the amendments are shown in full below for comparison.
1- دون إخلال بما ورد في الفقرة (2) من هذه المادة، تفرض الضريبة على استيراد وتوريد السلع والخدمات، وفقاً للأحكام المنصوص عليها في الاتفاقية والنظام واللائحة.
2- تطبق الضريبة بنسبة أساسية قدرها (15%) من قيمة التوريد أو الاستيراد، مالم يرد نص الإعفاء أو فرض نسبة الصفر - بناءً على أحكام النظام واللائحة - على التوريد ذاته.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 2 explained in plain English
This article is the foundation of value added tax in the Kingdom. It sets out what the tax is imposed on and at what rate.
First: scope of the tax
The tax is imposed on two things: the import of goods and services, and their supply. This is in accordance with the provisions of the Unified Agreement for Value Added Tax of the GCC states, the Law and the Regulations. The article does not itself spell out when an act counts as a supply or an import; it refers that to these sources.
Second: the basic rate
The tax applies at a basic rate of 15% of the value of the supply or import. This is the general rate that applies unless a specific provision says otherwise.
Third: the two exceptions
- Exemption: where a provision exempts the supply itself from the tax.
- Zero rate: where a provision applies a zero percent rate to the supply.
The exemption or zero rate must be based on the provisions of the Law and the Regulations. This article does not list the exempt or zero-rated supplies; they are identified from those provisions. This is why paragraph 1 makes the imposition of the tax subject to "without prejudice to paragraph (2)".
The article was amended by Royal Order No. (A/638) dated 15/10/1441 AH to take its current wording, which sets the basic rate at 15%.
This article is linked to Article 3, which requires a taxable person to register according to its economic activities in the Kingdom, and allows voluntary registration for those not required to register, subject to the Regulations. For a question about whether a particular activity is taxable or exempt, it is advisable to consult a lawyer or an adviser specializing in zakat, tax and commercial matters.
Practical example
An electronics store in Riyadh sold a device with a supply value of SAR 2,000, and no provision in the Law or the Regulations exempts this supply or makes it zero-rated. The basic rate of 15% therefore applies, so the tax on this supply is SAR 300.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentA question about Article 2 of Value Added Tax Law?
Describe what happened and specialist lawyers answer. You can write in English.
- Completely free
- Lawyers from the directory answer
- Your name stays hidden
Commercial & Corporate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Commercial & Corporate Law lawyers
Lawyers who handle this kind of case
شركة امتداد النظام للمحاماة والاستشارات المهنية
- Labour & Employment Law
- Criminal Law
- Criminal Law
- Commercial & Corporate Law
Frequently asked questions about Article 2 of the Saudi Value Added Tax Law
What is the VAT rate in Saudi Arabia?
The basic rate is 15% of the value of the supply or import, unless a provision provides for an exemption or a zero rate based on the Law and the Regulations.
Is VAT imposed on imports?
Yes, the article imposes the tax on the import and supply of goods and services in accordance with the Agreement, the Law and the Regulations.
Are all goods and services subject to 15%?
No. Supplies that a provision exempts, or subjects to a zero rate, based on the Law and the Regulations, are excepted.
When was the VAT rate amended to 15%?
The article was amended to its current wording by Royal Order No. (A/638) dated 15/10/1441 AH.
Amendment history
Royal Decree No. A/638 — 15/10/1441 AH
Official amendment text (Arabic)
- عُدلت هذه المادة وذلك بموجب الأمر الملكي رقم (أ/638) وتاريخ 1441/10/15هـ، لتكون بالنص الآتي:
1- دون إخلال بما ورد في الفقرة (2) من هذه المادة، تفرض الضريبة على استيراد وتوريد السلع والخدمات، وفقاً للأحكام المنصوص عليها في الاتفاقية والنظام واللائحة.
2- تطبق الضريبة بنسبة أساسية قدرها (15%) من قيمة التوريد أو الاستيراد، مالم يرد نص الإعفاء أو فرض نسبة الصفر - بناءً على أحكام النظام واللائحة - على التوريد ذاته.
Original text before the amendments (Arabic)
تفرض الضريبة على استيراد وتوريد السلع والخدمات، وفقاً للأحكام المنصوص عليها في الاتفاقية والنظام واللائحة.
More articles on Scope and Rate of Value Added Tax
- Article 1
The article defines the key terms of the Value Added Tax Law and refers to the unified GCC agreement for the meaning of all other terms.
1- يُقصد بالألفاظ والعبارات الآتية - أينما وردت في النظام - المعاني المبينة أمام كل منها، ما لم يقتضِ السياق خلاف ذلك: الهيئة: الهيئة العامة للزكاة والدخل. النظ
- Article 8
The article refers to the Regulations to identify the transactions in which the supply of goods and services is outside the scope of value added tax.
تحدد اللائحة المعاملات التي يكون فيها توريد السلع والخدمات خارج نطاق الضريبة.
- Article 18
The article provides that the tax due is at the rate applied on the date of supply, or on the date of import.
تكون نسبة الضريبة المستحقة هي النسبة المطبقة في تاريخ التوريد، أو في تاريخ الاستيراد.
- Article 50
The article makes the Authority responsible for administering, examining, assessing and collecting the tax and taking the procedures it sees fit, subject to customs' role in collecting import tax under Article 28.
مع مراعاة ما تقضي به المادة (الثامنة والعشرون) من النظام، تتولى الهيئة مسؤولية إدارة وفحص وتقييم وتحصيل الضريبة، ولها في سبيل ذلك اتخاذ ما تراه من إجراءات.
- Article 51
The article allows the Authority to coordinate with government bodies to implement the Agreement, the Law and the Regulations, and requires government bodies and persons to provide it with the information it requests for tax purposes.
1 - للهيئة التنسيق مع الجهات الحكومية في كل ما له علاقة بتنفيذ أحكام الاتفاقية والنظام واللائحة. 2 - على جميع الجهات الحكومية والأشخاص تزويد الهيئة بالمعلومات ا
- Article 52
The article requires the Authority's Board of Directors to issue the Regulations within thirty days of the Law's issue, to apply from its effective date, and to issue the decisions and instructions needed to implement the Law and the Regulations.
يصدر مجلس إدارة الهيئة اللائحة خلال ثلاثين يوماً من تاريخ صدور النظام، ويعمل بها من تاريخ نفاذه. ويصدر كذلك القرارات والتعليمات اللازمة لتنفيذ أحكام النظام والل
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.