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Software Sales Tax in Saudi Arabia 🇸🇦

How do I solve my tax liability?
Agony Rating
Sales Tax Rate
Taxable Goods
Highest Penalty

How likely am I to get caught for owing sales tax in Saudi Arabia?

Not very likely.

What is the sales tax threshold in Saudi Arabia?

The current threshold for VAT in the Saudi Arabia is SAR 375,000 (~$100,000).

Is SaaS taxable in Saudi Arabia?

Yes. You owe tax for the sale of cloud software subscriptions to customers in Saudi Arabia.

Are software downloads taxable in Saudi Arabia?

Yes. You owe tax for the sale of software downloads to customers in Saudi Arabia.

Are eBooks taxable in Saudi Arabia?

Yes. You owe tax for the sale of eBooks to customers in Saudi Arabia.

Are digital downloads taxable in Saudi Arabia?

Yes. You owe tax for the sale of digital downloads to customers in Saudi Arabia.

Registering for VAT in Saudi Arabia

😩🌶️🌶️🌶️ It's *painfully* complicated

Registering for sales tax in Saudi Arabia is quite a complex process. 

While it isn’t mandatory for you to use a local tax agent, the tax authority does require that you share responsibility for the recordkeeping with someone locally.  If you decide to opt- out from the appointment of the local tax representative, you will more likely be asked to pay a security deposit upfront, in case you fail to meet your tax obligations in the Kingdom of Saudi Arabia (KSA) at a later date.

You also need to navigate through the online portal where not everything that you need to know and understand will be in English!

Filing & Remittance of VAT in Saudi Arabia

😐🌶️ It's not that complicated

The VAT rate in Saudi Arabia increased by 300% in 2020 (from 5% to 15%). 

The filing restrictions have recently been simplified slightly, meaning it’s easier to file and remit your taxes online.

Penalties for VAT non-compliance in Saudi Arabia

😩🌶️🌶️🌶️ It's crippling to the business / person

The tax authorities in Saudi Arabia don’t look kindly on those found to be non-compliant and as such, the penalties can be crippling for businesses. 

For mistakes, such as late filing, late payment or miscalculation of the tax owed you could incur fines of between 5-25% of the tax due. All the other fines are fixed in Saudi riyal (SAR) and could easily reach SAR 50,000 (~$13,000). Where a company is thought to have committed tax evasion, you could be charged up to 300% of the tax owed, to SAR 100,000 (~$26,000).

Had enough yet? There's more…

How to become sales tax compliant globally 🗺

Three Routes to Compliance for SaaS Executives

SaaS executives have a choice of three routes to global tax compliance. Get the guide to walk through the options for your team.

Download the guide »

Don't Worry, Ask Hugo

As CFO of Paddle, Hugo's finance team manages global tax compliance for $100M's of ARR from over 2,000 software businesses. Ask your questions in our live webinar.

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How can Paddle help?

Paddle can take all your responsibility & liability for sales tax off-your hands. Our global entities, finance team, and $160k+ year spend on agents, tooling, and accountants is ready for you.

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