VAT Comparison between United Arab Emirates (UAE) and Kingdom of Saudi Arabia(KSA)

naseernaseer    14 October 2019
VAT Comparison between United Arab Emirates (UAE) and Kingdom of Saudi Arabia(KSA)

The Member States of the Gulf Cooperation Council (GCC) are :

  • The United Arab Emirates (UAE)
  • The Kingdom of Bahrain
  • The Kingdom of Saudi Arabia (KSA)
  • The Sultanate of Oman
  • The State of Qatar
  • The State of Kuwait

These GCC member states  have a Unified Gulf Cooperation Council (GCC)  Vat Framework Agreement which has formed the basis of VAT regime in all GCC member states. As per the agreement, each GCC member state is free to module its own domestic VAT legislation to implement in its own country, based on the underlying principles and guidelines in this GCC VAT Framework. VAT was introduced on  1st January 2018 in both UAE and KSA.

The standard VAT rate in GCC is 5%, unless an exemption or zero rate is applicable.

The purpose of this article is  tooutline some of the key points and differences in UAE and KSA VAT legislation. This is discussed below:

1. Mandatory Registration – Threshold

The minimum limit of the value of actual supplies at which the Taxable Person is required  to register for Tax purposes.

Article 50(2) of GCC VAT Agreement - “The Mandatory Registration Threshold shall be SAR 375,000 (or its equivalent in the GCC State currencies). The Ministerial Committee has the right to amend The Mandatory Registration Threshold after it has been in force for three years.”Accordingly, the mandatory registration threshold will be an annual business turnover of over:

UAE-  AED 375,000 KSA – SR 375,000

2. Mandatory Registration - Period

Both UAE and KSA consider last 12 months and next 30 days of revenue for the purpose of mandatory registration.

3. Voluntary Registration – Threshold

The minimum limit of the value of actual supplies at which the Taxable Person may apply to register for Tax purposes.

Article 51 of GCC VAT Law - “The Voluntary Registration Threshold is 50% of the Mandatory Registration Threshold”. The voluntary registration threshold will be an annual business turnover that is below the mandatory registration but above:

UAE -  AED 187,500KSA -  SR 187,500

Businesses must register for VAT if their annual turnover exceeds the mandatory registration threshold, while it is optional for them to register if the taxable supply and imports are below the mandatory registration threshold but exceed the voluntary registration threshold. 

In Saudi Arabia, businesses that supply goods or services that are zero rated are not required to register for  VAT , whereas UAE requires such businesses to request an exemption from mandatory registration. 

4. Tax Return Submission Date

Article 61 of GCC VAT Law - “Each Member State shall determine the timeframes, conditions and rules for submission of Tax Returns by a Taxable Person for each tax period, provided that The Ministerial Committee shall determine the minimum data required to be included in the tax return.”

UAE -  Required to be submitted on a quarterly basis, with the returns and payments due within 28 days after the end of the period.

KSA - Companies with annual income in excess of SR 40 million  must file returns on a monthly basis, while companies under this threshold must file their returns on a quarterly basis, with payments required to be made within a month of the end of the relevant period.

5. Retention of Records – tax invoices, books and accounting documents

Accounting  and bookkeeping records maintained by taxable persons should be retained for a period of 5 years for UAE and 6 years for KSA after the end of the tax period to which they relate

UAE – 5 YearsKSA – 6 Years

6. Tax Debit Notes

In both UAE and KSA, if by error or omission a Tax Invoice was undervalued, you need to issue an additional Tax Invoice describing the change.

7. VAT Penalties

The VAT law in both UAE and KSA  provides for the levy of penalties in the case of non-compliance by a business or a person.


Administrative penalty – Not less than AED 500 and not more than 3 times the amount of tax for which the penalty was levied

Tax evasion penalty – Upto five times of the relevant tax at stake


Administrative penalty –  SR 10,000 for failure to register on time. Immediate penalty upto 25% of relevant tax  amount due, after the due date is over which is last day of the subsequent month

Tax evasion penalty – Not less than the amount of tax due and not more than three times the value of the goods or services


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