1Issue 3 | May 2026

Promotional Offers Including “Free” Goods In some cases, a good or service may be described as “free” as part of a promotional language, yet it is provided as part of a bundle with other goods or services (for example, a retailer sells two identical items and provides a third item “free,” or a mechanic provides a “free” safety inspection as part of a vehicle service). The provision of free items requires analysis to determine whether a Nominal Supply arises. Further details are provided in Section 7.1 of this Guideline. 4.4 VAT Rate 4.4.1 Zero-Rated Medical Goods VAT is imposed on nearly all types of domestic supplies, with most supplies subject to the standard rate of 15%. An exception to this rule applies to the supply of qualifying medicines and medical goods, classified by the Ministry of Health and approved by ZATCA, which are subject to VAT at a zero percent rate(18). The zero percent rate applies to all supplies of qualifying goods by the Taxable Person at every stage of the supply chain. This includes supplies made by manufacturers, distributors, private healthcare providers, pharmacies, retailers, and Suppliers of qualifying medical goods. For further details regarding zero-rated medical goods, refer to the Healthcare VAT Guideline. (18)  Article 35, Implementing Regulations. Please refer to ZATCA’s website for eligible goods and medicines. 5. VAT Calculation The tax point rules (date of supply) determine the date on which VAT obligations arise and when VAT must be calculated in respect of any supply of goods or services. Separately, the Taxable Person calculates the net tax payable to ZATCA for each tax period. The date on which net VAT is due is determined by the tax point rules, in addition to the VAT accounting method applied. Each supply has a separate tax point, which falls within a tax period. In principle, VAT on these supplies is payable to ZATCA as part of the total net tax for the entire tax period, following the submission of the tax return. The Implementing Regulations stipulate that the net VAT payable is calculated on a presumptive basis by deducting the total Input Tax permitted, including Input Tax on imports, from the total Output Tax payable in respect of all taxable supplies made by the Taxable Person in the Kingdom during the tax period(19). This VAT accounting treatment is known as invoice-based accounting (see clause 5.2). For small businesses whose annual turnover does not exceed SAR 5,000,000, they may use an alternative basis related to actual payment for the supply, known as cash-based accounting (see clause 5.3).