RECENTLY PUBLISHED

VAT on Exports from UAE to Saudi Arabia

Updated on: Mar 28th, 2024

6 min read

Navigating the complexities of Value Added Tax (VAT) across borders can be challenging, especially when exporting between countries with differing regulations.

This article clarifies the VAT applicability on exports from the United Arab Emirates (UAE) to Saudi Arabia, considering the current taxation systems.

VAT in Saudi Arabia

Saudi Arabia introduced a 5% VAT in 2018, applicable to goods and services within the Kingdom. Later on, in 2020, the VAT rate increased to 15%.

However, exports of goods and services are zero-rated, meaning no VAT is charged. This aligns with the GCC Common Tax System agreement.

VAT on exports from the UAE

The UAE's Federal Tax Authority (FTA) adopted a 5% VAT in 2018. However, its application on exports depends on the destination and recipient, such as:

Export of goods to non-GCC VAT-implementing States
Export of goods to GCC VAT implementing States

A non-GCC VAT-implementing State can be

A country within the GCC territory which has not implemented VAT
A country outside of the GCC territory

Exports from UAE to	VAT applicability
GCC VAT-implementing countries	Zero-rate/ 5% VAT/ destination country VAT rate (Based on scenarios explained in the next section)
Non-GCC VAT-implementing countries	Zero-rate
Outside GCC	Zero-rate

VAT on exports from UAE to Saudi Arabia

KSA and UAE have implemented VAT in the GCC region. So, let’s take a look at the VAT applicability on exports from UAE to KSA:

Recipient category	VAT applicability
Registered under KSA VAT	Zero-rate
Unregistered under KSA VAT, and the annual export value (in the last 11 months) is less than the KSA VAT registration threshold	5% VAT
Unregistered under KSA VAT. However, the annual export value (in the last 11 months) exceeds the KSA VAT registration threshold	15% VAT (The recipient has to register under KSA VAT, and the KSA VAT rate is applicable for the transaction)