Since the implementation of VAT in Saudi Arabia in 2018, understanding how it works and how to calculate it has become essential, especially for businesses and companies. With increasing complexity and regulations, relying on a professional accounting firm that provides complete guidance is critical for accurate tax compliance and timely VAT filing. At Al-Hamli & Partners, we offer comprehensive services including VAT registration requirements, calculate VAT, invoice review, and representation before the Zakat, Tax and Customs Authority (ZATCA).
How to Calculate VAT Using a Calculator?
VAT is an indirect tax applied to certain goods and services. It is added to the final price and borne by the consumer, while the tax amount is collected by ZATCA. When VAT was first introduced in January 2018, the rate was 5%, and it was later increased to 15% in 2020.
But how to calculate VAT?
Here’s a simple example using the standard formula to calculate VAT:
VAT = (Price of the good or service × VAT rate)
If the product is worth SAR 1,000 and the VAT rate is 15%:
VAT = 1,000 × 0.15 = SAR 150
Thus, the total price becomes SAR 1,150
Another, perhaps easier, method for many people is using online VAT calculators. Several websites offer this service, where you simply enter the price, choose to calculate VAT, and the value along with the total price will be displayed.
Accurate VAT calculation in Saudi Arabia will help you avoid penalties, ensure the correctness of your tax returns, and present a transparent financial image of your business.
How Is VAT Calculated When Filing the Annual TAX Return?
The annual return is an official document listing a company’s purchases and sales for the year and is submitted to ZATCA. In some cases—especially for small businesses or year-end reconciliations—an annual return may be required. However, most companies are expected to file either monthly or quarterly returns.
So how to calculate VAT?
Simply put, the formula is:
VAT = Output VAT – Input VAT
- Output VAT is the tax collected by the company from customers when selling goods or services.
- Input VAT is the tax the company pays when purchasing goods or services needed for business operations.
Let Al-Hamli & Partners take the hassle out of numbers. Our team is ready to handle invoice reviews, ensure compliance with regulations, audit your accounts, submit Tax returns, and represent your business before ZATCA. We also provide support during audits or in the case of disputes. For more information about VAT in Saudi Arabia, contact us at 0539300404.
Also Read:
- Discover the Biggest Accounting Firms in Saudi Arabia in 2025
- Learn the Importance of a Certified Chartered Accountant Office for Your Business Success
- Your Guide to Choosing the Best Office of Chartered Accountants and Auditors in Saudi Arabia
- How a Certified accounting firm Helps You Make Strategic Financial Decisions?
- Entrepreneurs in Saudi Arabia: Why You Need a Financial Consulting Firm Today
- Why Startups & SMEs Look for Specialized Accounting Firms?
- How to Choose a Legal Accountant in Dammam? A Comprehensive Guide
Tax Evasion Penalty in Saudi Arabia – Mistakes to Avoid
Tax evasion involves hiding or misrepresenting information to reduce or avoid paying VAT.
Tax evasion penalty in Saudi Arabia may include:
- Fines of up to 100% of the unpaid tax
- Suspension of business activities
- Delayed payment fines of up to 25% of the amount due
- Blocking access to government services
- Judicial investigation into cases of manipulation or non-payment
Common tax evasion mistakes include:
- Submitting unauthorized or inaccurate invoices
- Failing to register for VAT, which is a legal violation
- Omitting cash sales from official records
- Filing inaccurate VAT returns to reduce tax liability
- Hiding or failing to record certain invoices
- Delaying or failing to submit VAT returns, which will definitely result in penalties
For more information about VAT in Saudi Arabia, contact us at 0539300404.
From Filing to VAT Calculation in One Place – Al-Hamli & Partners
The tax compliance process for businesses is filled with details and procedures that must not be overlooked to avoid penalties or falling into the trap of tax evasion. That’s why at Abdullah Al-Hamli & Partners, we provide you with peace of mind by offering comprehensive services backed by our deep expertise in Saudi regulations. We handle VAT return submissions and ensure full compliance with the Executive Regulations of the Value Added Tax system.
Our main tax and zakat services include:
- Preparing and submitting monthly, quarterly, or annual VAT returns and filing them electronically with ZATCA.
- Organizing tax invoices.
- Accurately calculate VAT including inputs and outputs.
- Conducting internal auditing service before tax inspections.
- Providing advisory services aligned with VAT regulations.
- Using advanced digital systems to help clients manage invoices and tax reports easily.
For more information about VAT in Saudi Arabia, contact us at 0539300404.
Conclusion:
Compliance of VAT in Saudi Arabia has become essential for businesses of all sizes. It’s not just about accounting and legal skills—it requires practical expertise, a deep understanding of the Saudi market, and up-to-date knowledge of tax legislation. Having a professional team ensures your business is protected from legal or financial risks.
Don’t let VAT returns become a financial or administrative burden. Trust a licensed accounting firm to manage the entire process—from tax planning and e-invoicing to filing returns and representing you before ZATCA.
Common Questions:
What is the law of VAT in Saudi Arabia?
The VAT law in Saudi Arabia, issued by ZATCA, imposes a 15% tax on certain goods and services. It defines registration procedures, return filing, and calculates VAT in line with the official regulations.
What is the commercial store tax in Saudi Arabia?
Commercial stores in Saudi Arabia may be subject to various taxes, including 15% VAT on applicable goods and services. Additionally, stores owned by non-Saudis or foreign entities may be subject to income tax. For more details, contact us at 0539300404.
What is the corporate tax in Saudi Arabia?
Corporate tax in Saudi Arabia is 20% on the net profit of non-Saudi entities, while Saudi-owned companies are subject to Zakat. Certain business activities may also be subject to the 15% VAT. For more information, contact us at 0539300404.
What is the withholding tax rate in Saudi Arabia for 2025?
The 2025 withholding tax applies to payments made to non-residents, with rates varying by income type: 5% on dividends, interest, and rent; 15% on technical consultancy services; and 20% on management fees and royalties.
