Terms & definitions

The terms and definitions outlined in this section clearly define the meaning of words and statements related to VAT

VAT
Value Added Tax (VAT) imposed on the import and supply of Goods and Services at each stage of production and distribution, including “Nominal Supplies”

Taxable Person
A Person that conducts an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT according to the Agreement

Agreement
The Unified VAT Agreement for the Council States

VAT Group
Two or more Legal Persons who are residents of Saudi Arabia registered as a single Taxable Person

Economic Activity
An activity that is conducted in a continuous and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity

Goods Imports 
Goods entering any Member State from outside the Council Territory according to the provisions of the Unified Customs Law

Output Tax 
The Tax due and chargeable in respect of any Supply of Taxable Goods or Services made by a Taxable Person

Input Tax
Tax payable by a Taxable Person with relation to Goods or Services supplied to or imported by such Taxable Person for the purpose of their Economic Activity

Net Tax
Tax resulting from deducting the Deductible Tax in a Member State from the Tax due in that State within the same Tax Period. Net Tax may either be payable or refundable.

Tax Invoice
Invoice issued in respect of Taxable Supplies meeting the requirements of the Law and Implementing Regulations

Exempted Supplies
Supplies on which no Tax is imposed and from which associated Input Tax as per the Agreement and Local Law is not deducted

Taxable Supplies 
Supplies on which Tax is charged according to the Agreement, whether at the basic rate or zero-rate, and from which Input Tax is deducted as per the Agreement

Internal Supplies 
Supplies of Goods or Services from a Supplier who resides in a Member State to a Customer who resides in another Member State

Reverse Charge (Mechanism) 
A mechanism by which the Taxable Customer is obligated to pay the Tax due instead of the Supplier and is also liable for all the obligations stated in the Agreement and the Local Law

Mandatory Registration Threshold  
The minimum value of actual supplies at which the Taxable Person becomes obligated to register for Tax purposes

Voluntary Registration Threshold  
The minimum value of actual supplies at which the Taxable Person may apply to register for Tax purposes