All About VAT Category Code in KSA Invoicing

Updated on :  

08 min read.

The Kingdom of Saudi Arabia (KSA) introduced Value Added Tax (VAT) w.e.f 1st January 2018. The tax authority decided to charge only a single VAT rate across the sale of goods and services. Initially, the VAT rate was 5%; however, to combat COVID-19, the Zakat, Tax and Customs Authority (ZATCA) has increased the standard VAT rate to 15% w.e.f 1st July 2020.

VAT invoicing rules in the KSA mandates taxpayers to issue a tax invoice, simplified tax invoice, or summary tax invoice based on the case. This article explains all about the VAT category code under KSA VAT.

VAT category code to be mentioned in the invoice

ZATCA notified the VAT category codes to be mentioned in an invoice based on the type of goods or services such as standard rate, zero-rated, exempt etc.

The below table gives the list of VAT category codes to be used while creating invoices in KSA:

Category of goods/servicesVAT category code to be mentioned
Standard rateS
Zero-rated goodsZ
Exempt from TaxE
Services outside the scope of VAT or Supplies not subject to VATO

Standard rate supplies

Taxable supplies on which 15% VAT is charged fall under standard rate supplies. This category covers most supplies except zero-rated, exempted and out-of-the-scope supplies.

Zero-rated supplies

Zero-rated supplies are taxable; however, the rate is 0%. In future, the authority may charge the VAT rate. These include exporting goods and services, international transportation, and investment metals.

Exempt supplies

These supplies are exempt, i.e. no VAT is leviable. However, ZATCA may notify them as taxable supplies in future. These include notified financial services and qualifying residential estate.

Out-of-the-scope supplies

These are the supplies that are kept out of the purview of VAT. These include:

  • Gifts that are given as a business promotion
  • Supplied goods or services as compensation for loss
  • Payment of wages and salaries under the contract of employment

VAT category reason code for exempted sales

ZATCA has also mandated quoting VAT category code and exemption reason code. The following table lists the exempted goods and services type and the codes to be mentioned while creating VAT invoices in KSA.

Description of exempted/zero-rated goods/servicesVAT category code to be mentionedVAT exemption reason code to be mentioned
Financial services mentioned in Article 29 of the VAT RegulationsEVATEX-SA-29
Life insurance services mentioned in Article 29 of the VAT RegulationsEVATEX-SA-29-7
Real estate transactions mentioned in Article 30 of the VAT RegulationsEVATEX-SA-30
Export of goodsZVATEX-SA-32
Export of servicesZVATEX-SA-33
The international transport of GoodsZVATEX-SA-34-1
International transport of passengersZVATEX-SA-34-2
services directly connected and incidental to a Supply of international passenger transportZVATEX-SA-34-3
Supply of a qualifying means of transportZVATEX-SA-34-4
Any services relating to Goods or passenger transportation, as defined in article twenty-five of these RegulationsZVATEX-SA-34-5
Medicines and medical equipmentZVATEX-SA-35
Qualifying metalsZVATEX-SA-36
Private education to citizenZVATEX-SA-EDU
Private healthcare to citizenZVATEX-SA-HEA

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