What is a VAT Return?

A VAT return is an official document that contains details of the VAT liability and payments due for a taxpayer during a specific time period. This document is submitted electronically through the online portal of the Zakat, Tax and Customs Authority (ZATCA) according to the forms approved by the Authority, and is considered a legal obligation for all establishments registered in the Value Added Tax (VAT) system.

The purpose of the VAT return is to achieve transparency in commercial transactions and ensure the collection of the state's VAT rights, as these revenues are used to finance development projects and public services in the Kingdom.

The Importance of VAT Returns for Businesses

The importance of VAT returns lies in the fact that they represent the official means of disclosing commercial activity and the volume of transactions subject to VAT. By submitting VAT returns on time, businesses avoid being exposed to fines and financial penalties that may negatively affect their commercial reputation and ability to obtain financing or enter into government tenders.

The Main Benefits of Submitting VAT Returns:

• Legal Compliance: Avoid legal violations and penalties
• Business Reputation: Build a clean VAT record that enhances trust with business partners
• VAT Refunds: Possibility to recover input VAT paid on purchases
• Financial Planning: Better understanding of VAT obligations and improved financial planning

Who Must File a VAT Return?

According to the VAT system in the Kingdom, the following categories must submit VAT returns:

1. Mandatory Registration:

Establishments whose annual taxable revenue exceeds SAR 375,000 are obligated to register in the VAT system and submit periodic VAT returns.

2. Voluntary Registration:

Establishments with annual revenues between SAR 187,500 and SAR 375,000 can register optionally to benefit from the advantages of the system such as recovering input VAT.

3. Foreign Establishments:

All foreign institutions that conduct commercial activities within the Kingdom are required to submit VAT returns as long as sales and purchase transactions take place within Saudi borders.

VAT Return Deadlines

The deadlines for submitting VAT returns vary according to the size of the establishment and the nature of its activity:

Monthly Returns:

• Eligible Establishments: Those whose annual taxable sales exceed SAR 40 million
• Deadline: Last day of the month following the end of the tax period
• Example: January return must be submitted by the end of February

Quarterly Returns:

• Eligible Establishments: Those whose annual sales are less than SAR 40 million
• Deadline: Last day of the month following the end of the quarter
• Tax Quarters:
  • First Quarter: January - March (Submission by end of April)
  • Second Quarter: April - June (Submission by end of July)
  • Third Quarter: July - September (Submission by end of October)
  • Fourth Quarter: October - December (Submission by end of January)

Contents of the VAT Return

The VAT return includes detailed information about all transactions subject to VAT during the specified period, including:

1. Sales and Revenue:

• Value of sales subject to 15% VAT
• Value of sales subject to 0% VAT (exports)
• Value of VAT-exempt sales
• Sales of healthcare and private education to Saudi citizens

2. Purchases and Expenses:

• Value of taxable domestic purchases
• Value of taxable imports
• Input VAT paid that is recoverable

3. Adjustments and Modifications:

• Returned goods from customers
• Bad debts written off
• Corrections to previous returns

Steps for Submitting VAT Returns Electronically

The process of submitting VAT returns has become easy and simplified through the electronic portal of the Zakat, Tax and Customs Authority:

Step One: Login

Visit the official website of the Authority at zatca.gov.sa and log in using the username and password of your establishment.

Step Two: Access the Service

Go to the "Electronic Services" section, select "Value Added Tax" then "VAT Returns".

Step Three: Determine the Tax Period

Choose the tax period for which you want to submit the VAT return (monthly or quarterly according to your establishment's classification).

Step Four: Fill in the Data

Enter all required information in the designated fields:

• Total Sales: Enter the value of all sales and services provided
• VAT Collected: Calculate the value of VAT on sales (15%)
• Purchases and Expenses: Record the value of taxable purchases
• Input VAT: Enter the value of VAT paid on purchases

Step Five: Review and Confirm

Carefully review all entered data to ensure its accuracy before final submission.

Step Six: Submit and Pay

Click the "Submit Return" button and the net VAT due will be calculated automatically. You can pay directly through the SADAD system.

Step Seven: Obtain Confirmation

You will receive a confirmation of receipt of the VAT return and a reference number via SMS or the registered email.

Fines and Financial Penalties

Failure to submit VAT returns or delay in payment exposes the establishment to graduated financial fines:

Late Filing Fines:

• Rate: Ranges from 5% to 25% of the VAT due amount
• Maximum Limit: According to the duration of delay and size of violation

Late Payment Fines:

• Rate: 5% of the unpaid VAT amount for each month or part thereof
• Accumulation: The fine accumulates monthly until full payment

Other Fines:

• Non-Registration: SAR 10,000
• Issuing Tax Invoice Without Registration: Up to SAR 100,000
• VAT Evasion: Up to 25% of the VAT due amount
• Providing Incorrect Information: 50% of the difference between the calculated and due VAT

Tips to Avoid VAT Violations

To ensure full compliance and avoid fines, follow these important guidelines:

1. Accounting Organization:

Be sure to accurately and systematically document all commercial transactions. Use approved accounting systems that comply with the requirements of the Zakat, Tax and Customs Authority.

2. Record Keeping:

Keep all invoices and supporting documents for a period of no less than 5 years, arranged by dates and types of transactions.

3. Periodic Review:

Conduct periodic reviews of your accounts and ensure the accuracy of VAT calculations on all transactions before the filing deadline.

4. Continuous Training:

Ensure that employees responsible for accounts and VAT are trained on the latest updates and amendments to VAT regulations.

5. Specialized Consultation:

Do not hesitate to seek help from a specialized VAT advisor when needed, especially for complex transactions or when you have inquiries.

Latest Updates for 2025

The year 2025 witnessed several important updates in the VAT return system:

Fines Exemption Initiative:

The initiative to cancel fines and exempt financial penalties has been extended for an additional 6 months, allowing taxpayers an opportunity to correct their VAT situations without incurring late fines.

Electronic Facilities:

New improvements to the electronic portal to facilitate the process of filing VAT returns and reduce common errors in data entry.

Enhanced Technical Support:

Expanding the scope of technical support services through the unified call center (19993) to work 24 hours a day, 7 days a week.

Frequently Asked Questions

Can a VAT return be amended after submission?

Yes, the Authority provides a service to amend previously submitted VAT returns through the electronic portal, taking into account that the amendment may result in fines if it results in a difference in the VAT due.

What happens if the establishment ceases activity?

The taxpayer must immediately notify the Authority and submit a final VAT return within 60 days from the date of cessation of activity.

Can installments be made in case of inability to pay?

Yes, the Authority allows the possibility of scheduling due amounts according to specific terms and conditions, provided that the approved payment plan is adhered to.

Conclusion

The VAT return is not just a legal obligation, but an important tool for building a clean VAT record that enhances the credibility of your establishment in the market. By adhering to submitting VAT returns on time and ensuring the accuracy of the data provided, your establishment ensures avoiding fines and penalties and contributes to supporting the economic development of the Kingdom.

For more information and support, you can contact the Zakat, Tax and Customs Authority via:

• Website: zatca.gov.sa
• Unified Call Center: 19993
• Email: info@zatca.gov.sa
• "Ask Zakat, Tax and Customs" account on Platform X