Under Royal Decree No. A/638 of 1441H (2020) and the VAT Implementing Regulations, what is the standard VAT rate applied to most taxable supplies of goods and services in Saudi Arabia from 1 July 2020 onward?
- 5%
- 15%
- 10%
- 20%
Why B? And why not the others?
Correct answer: B. 15%
Royal Decree No. A/638 of 1441H raised Saudi Arabia's standard VAT rate from 5% to 15% with effect from 1 July 2020, and that 15% rate has applied to most taxable supplies of goods and services under the VAT Implementing Regulations ever since. The 5% figure is wrong because it describes the original rate that applied only from the VAT Law's introduction in 2018 until the mid-2020 increase, and it was superseded rather than remaining current. The 10% figure is wrong because Saudi Arabia has never applied a general 10% standard VAT rate; no such intermediate rate exists in the VAT Law or its regulations. The 20% figure is wrong because it overstates the standard VAT rate and instead resembles the flat corporate income tax rate that applies under an entirely separate law to non-Saudi shares in a resident company, which has no bearing on VAT.
Source: Royal Decree No. A/638 of 1441H (2020); VAT Implementing Regulations