1Issue 3 | May 2026

(calculated using the following formula ـــــــــــــــــــــــــ This amount must be shown on the tax invoice issued to the developer and included as Output Tax in the tax returns. (16)  Article 25(2), Unified VAT Agreement 4.2.2. Discounted Prices A “discounted price” is a commercial term that represents a sale price reduced relative to a previous sale price. In such cases, VAT is payable on the basis of the “discounted” consideration received or payable for the supply. Example 4: A fashion store displays shirts at the “usual” retail price of SAR 250, granting all Customers a discounted price of SAR 200. If a Customer purchases a shirt during the discount period, VAT is calculated on the discounted consideration received (VAT of SAR 26.1, calculated as ـــــــــــــــــــــــــ Discounts may also be applied after the Supplier and Customer have agreed on the consideration, or after any of the following events: y The supply of goods or services has been made. y The Supplier has issued the invoice. y Payment of the agreed consideration has been made. In all cases, the discount represents a reduction in the total amount payable. The Unified VAT Agreement explicitly states: “The value of the supply is reduced by the following: price reductions and discounts granted to the Customer(17).” . Example 5: A retailer selling televisions advertises a “lowest price guarantee” by selling a TV for SAR 2,200 (including VAT of SAR 286.95, calculated as ـــــــــــــــــــــــــ (17)  Article 26(6)(a), Unified VAT Agreement Two days later, a Customer returns with proof that the same television is being sold for SAR 2,000, inclusive of VAT, at another store. The store manager grants a discount to match the SAR 2,000 price. The Supplier must adjust the value of the supply by issuing a credit note to the Customer, reflecting the new price and the revised VAT amount (VAT SAR 260.87, calculated as ـــــــــــــــــــــــــ 4.2.3. Payments to Suppliers by Third Parties In some cases where goods are sold to Customers at discounted prices, a third party, such as the manufacturer or a promotional company, may make payments to the Supplier to support the promotional activity. The resulting tax treatment may vary depending on the circumstances of each case, as follows: Consideration 1: The Third Party Receives a Service from the Supplier Description: The Supplier provides a service to the third party in return for consideration, which may be calculated either as a fixed amount over a specified period or based on the number of goods sold at the discounted price. Tax Treatment: The consideration for the supply of the service is subject to tax separately from the supply of the goods to the Customer.