A non-resident company with no place of business, fixed establishment, or any other presence in Saudi Arabia supplies streaming subscription services electronically to individual consumers located in Saudi Arabia who are not VAT-registered. Under the Saudi VAT registration rules for non-resident suppliers of electronic services, must this company register for Saudi VAT?
- No, non-resident suppliers with no physical presence in Saudi Arabia can never be required to register for Saudi VAT, regardless of who their customers are or how much they supply
- Yes, a non-resident supplying electronic services to non-taxable individual customers in Saudi Arabia must register for Saudi VAT, and this obligation applies regardless of the value of its supplies
- Only if its total supplies to Saudi customers exceed the ordinary SAR 375,000 mandatory registration threshold that applies to resident businesses
- No, because responsibility for accounting for VAT on such supplies always shifts automatically to the individual consumer under the reverse charge mechanism
Why B? And why not the others?
Correct answer: B. Yes, a non-resident supplying electronic services to non-taxable individual customers in Saudi Arabia must register for Saudi VAT, and this obligation applies regardless of the value of its supplies
A non-resident supplier with no presence in Saudi Arabia that supplies electronic services to non-taxable individual customers located in the Kingdom must register for Saudi VAT, and this registration obligation is mandatory regardless of the value of the supplies made, unlike the ordinary revenue-based thresholds that apply to resident businesses. The option claiming a non-resident can never be required to register is wrong because the absence of physical presence is exactly the situation this specific electronic-services registration rule was designed to reach. The option applying the ordinary SAR 375,000 mandatory threshold is wrong because that revenue-based threshold governs resident businesses' general registration obligation, not this value-independent rule for non-resident electronic-service suppliers to individual consumers. The option claiming the reverse charge shifts the liability to the consumer is wrong because reverse charge applies to business-to-business supplies received by a VAT-registered recipient; here the customers are non-taxable individuals, so the registration and accounting obligation instead falls on the non-resident supplier itself.
Source: Saudi VAT Law and Implementing Regulations, mandatory VAT registration for non-resident suppliers of electronic services to non-taxable persons in Saudi Arabia (zatca.gov.sa)