VAT revenue: the largest non-oil source
Since VAT was introduced in January 2018 and its rate raised to 15% in July 2020, revenue has roughly tripled. It rose from around SAR 47 billion in 2019 to more than SAR 130 billion in 2024, leading non-oil revenue sources, supporting public-finance stability, and reducing reliance on oil.
SAR billion
SAR billion
at launch
standard rate
Every business whose taxable revenue exceeds SAR 375,000 per year must register for VAT. Filing is monthly for businesses with revenue above SAR 40 million, and quarterly for those below.
E-invoicing: from the largest enterprises to everyone
The Zakat, Tax and Customs Authority (ZATCA) rolled out e-invoicing (“Fatoora”) in two phases: the generation phase in December 2021 for all registrants, and the integration phase from January 2023 across 24 successive waves by revenue size. Coverage widens steadily with each wave, as the revenue threshold dropped from SAR 3 billion in wave 1 to SAR 375,000 in wave 24, covering by 30 June 2026 every business registered for VAT, in the Gulf’s largest mandatory e-invoicing rollout.
| Wave | Annual revenue threshold | Compliance date |
|---|---|---|
| Wave 1 | More than SAR 3 billion | January 2023 |
| Wave 6 | More than SAR 70 million | January 2024 |
| Wave 13 | More than SAR 7 million | January 2025 |
| Wave 17 | More than SAR 2.5 million | July 2025 |
| Wave 22 | More than SAR 1 million | December 2025 |
| Wave 23 | More than SAR 750,000 | March 2026 |
| Wave 24 | More than SAR 375,000 | June 2026 |
Saudi Arabia’s tax-revenue system
Alongside VAT, ZATCA oversees an integrated system of taxes and levies, each with its own rate and scope. Notably, Saudi individuals pay no personal income tax.
| Tax | Rate | Scope |
|---|---|---|
| VAT | 15% | Most goods and services |
| Zakat | 2.5% of the zakat base | Businesses owned by Saudis/GCC nationals |
| Corporate income tax | 20% | Foreign ownership shares |
| Withholding tax | 5% to 20% | Payments to non-residents |
| Real estate transaction tax | 5% | Property disposal transactions |
| Excise tax | Varies by product | Tobacco, energy drinks, and sweetened drinks |
What do these numbers mean for businesses?
With e-invoicing covering every registered business, a cloud accounting system compliant with Phase 2 has become essential for a business’s readiness and efficiency. This is where a accounting system compliant with e-invoicing comes in:
- Issuing Phase 2 invoices: digitally signing and stamping each invoice with a QR code and hash chain in the approved XML format.
- Integration with the Fatoora platform: real-time clearance for business invoices and reporting within 24 hours for consumer invoices.
- Automatic VAT calculation: and preparing return-ready data for filing through the Authority’s portal.
Conclusion
Saudi Arabia is writing a pioneering chapter in digital tax transformation under Vision 2030: VAT revenue that has tripled to lead non-oil sources, and an e-invoicing system, the Gulf’s largest mandatory rollout, expanding to cover every registered business by mid-2026. This transformation raises transparency and collection efficiency, and gives businesses that adopt compliant cloud systems full readiness and a real operational edge.