1Issue 2 | Mary 2026

Example 7: A website that sells natural honey determines the number of its marketing campaigns to be conducted in 2021 and sets the number of winners in the draws at 40 winners, each winner receiving one jar of honey with a market value of SAR 30. The website also decides to provide free samples at the workplace to employees, with a maximum of 25 jars per calendar year. The total value of the supplies for the calendar year equals SAR 1,950, with a maximum of SAR 30 per recipient. In this case, the website is not required to report VAT on the presumed supplies, as the conditions for the exception are met. Returned Goods: If goods are returned to the domestic Supplier and the supply is cancelled, the Supplier must adjust the output tax charged and issue a credit note, in accordance with the procedures set out in the VAT Invoicing and Record-Keeping Guideline. If imported goods are returned to the Supplier at a later time, this does not affect the original taxable treatment arising on importation. ZATCA will not refund VAT paid on the importation of goods that are subsequently returned. The final importing Customer bears the cost of VAT on the importation of returned goods, and the recovery of VAT incurred on returned goods is considered a commercial matter between the non- resident Supplier and the Customer. This is without prejudice to cases where a Taxable Person imports goods for the purposes of its taxable Economic Activity, in which case it may deduct Input Tax in its tax return in accordance with the deduction rules under the applicable statutory provisions. Re-exportation of imported goods in the course of Economic Activity is treated as an export of goods and is subject to VAT at the zero rate, subject to meeting the statutory conditions(27). Freight Service Providers: Goods are generally imported on behalf of the seller (consignor) or the recipient (consignee), and the freight forwarder usually pays VAT to Customs on the import on behalf of the importer, and seeks reimbursement as disbursements (in addition to customs duties or other incidental charges incurred) from the importer. Where the importer is a Taxable Person and imports goods for the purposes of its Economic Activity, it will be required to include import data and VAT paid on importation in its VAT Return. This enables the importer to deduct VAT paid on importation as Input Tax (where the Input Tax deduction requirements are met, as discussed in the Input Tax Deduction Guideline). Note that freight companies are not entitled to deduct VAT paid on shipments imported by them as Input Tax, as they are not considered importers for their Economic Activity. If the seller of the goods is a non-resident in the Kingdom and is unable to act as the importer, the shipping agent may act as the importer and pay the VAT on imports to ZATCA, to be recovered from the seller or from the Customer upon delivery. The VAT on imports paid by the import representative constitutes an additional cost, and the representative is not entitled to deduct it as Input Tax in its tax return, as it is not related to its Economic Activity. This is considered a commercial matter to be agreed upon within the terms and conditions of sale of the goods between the seller and the Customer, and in accordance with the terms agreed by the shipping service providers. If the import representative imports on behalf of a person registered for VAT purposes and that person’s Tax Identification Number is provided at the time of importation, that person shall be entitled to deduct the VAT paid in its tax return, subject to meeting the other conditions for deducting Input Tax. 4.3 Supply of Services Electronic services form part of the broader term defined for VAT purposes as “Telecommunications (27) Article 32, Export of Goods from the Kingdom, Implementing Regulations of the VAT