Export of goods
The place of the supply of goods is the location of the goods at the time of sale of goods. Therefore, in case of export of goods, meaning a Saudi supplier sells the goods to a customer outside the KSA, the place of supply of the goods is in the KSA.
The exporter must retain evidence that goods have been transported from GCC territory within 90 days of the supply taking place, to be able to apply zero-rate.
If the supplier can provide the necessary evidence that the sale is an export of goods then VAT applies at the rate of 0%. Otherwise, the sale will subject to VAT at a standard rate of 15%. The documentation required as an evidence of export may include export documents issued by ZATCA or equivalent, any commercial documents such as invoice or contract and transportation documents.
The VAT also applies at zero-rate to the supplies which are made after export clearance but physically located in Saudi Arabia. This could include, for example, goods on a ship which is still within the KSA territorial waters, export without sale, supply to a duty-free shop, re-export of moveable goods that have been temporarily imported repairs or refurbishment, or direct exports where supplier arranges the transport of goods outside the GCC territory.
In the case of indirect exports, where the customer arranges for the transport of goods outside the GCC territory, VAT may apply at zero-rate in either of the following cases:
- the supplier clears the goods for export and the ownership of the goods is transferred to the customer after the export clearance takes place; or
- the ownership of the goods is transferred before the export clearance where the customer is not a KSA resident and the customer is required to transfer the goods from the KSA as a consequence of that supply.
The amount of the exported goods is required to be reported in ‘box 4' of the VAT return for zero-rated supplies. Further ZATCA guidance can be found here.
Export of services
As explained above in import of services section, the place of supply for services provided by a supplier resident in the KSA will be considered taking place in the KSA.
Therefore, any services provided by a KSA supplier to a recipient abroad will be considered as export of services unless the services fall under the special place of supply rules.
The exports of services outside the KSA are subject to VAT at zero-rate, unless one of the following cases apply:
- The supply is subject to a special place of supply rule described in the GCC VAT Treaty
- The customer is resident in a member state
- The customer or any other person has directly benefited from the services when situation in a Member State and the other person is not eligible to fully recover the input tax
- The services are performed on tangible goods located in a member state during the supply process
The services provided to a recipient who is outside the KSA and meet the above criteria will be reported in ‘box 4' of the VAT return for zero-rated supplies. Otherwise, the supply of services in the KSA will subject to VAT at a standard rate of 15%. Further ZATCA guidance can be found here.