Beta Version

Website Last updated:

May 15, 2026

This ZATCA Circular provides comprehensive guidance on VAT for the banking sector, addressing services for non-residents and credit card incentives. It distinguishes between taxable financial services (explicit fees) and exempt services (implicit margins). Exported services to non-GCC residents are zero-rated under Article 33, provided the benefit is not received by a person in KSA. The document further clarifies Interchange fees between Issuing and Acquirer banks and the VAT treatment of promotional incentives from credit card companies, categorising them as either service supplies or adjustments to consideration. It primarily clarifies Article 29 and Article 33.

Treatment of Certain Supplies in the Financial Services Industry

Tax Circular | VAT

1. Definitions

2. Subject Matter of this Circular

3. Situational Context

4. Supplies of services by resident banks in KSA to non-resident customers

4.1. Overview of main principles of imposition of VAT
4.2. The concept of 'GCC member states'
4.3. Conditions for applying the zero-rate

5. Incentives provided to banks by credit card companies

5.1. Introduction
5.2. VAT treatment
5.3. Supplies made by banks
5.4. Adjustment of consideration for an earlier supply by the credit card company

6. Interchange Services

6.1. Interchange fees in the Banking Sector
6.2. Illustrative Example

The Zakat, Tax and Customs Authority ("ZATCA", "Authority") has issued this Tax Circular for the purpose of clarifying certain tax treatments concerning the implementation of the statutory provisions in force as of the Circular's issue date. The content of this Circular shall not be considered as an amendment to any of the provisions of the Laws and Regulations applicable in the Kingdom.

Furthermore, the Authority would like to highlight that the clarifications and indicative tax treatments prescribed in this Circular, where applicable, shall be implemented by the Authority in light of the relevant statutory texts. Where any clarification, interpretation or content provided in this Circular is modified - in relation to unchanged statutory text - the updated indicative tax treatment shall then be applicable prospectively, in respect of transactions made after the publication date of the updated version of the Circular on the Authority's website.

Definitions

The following words and phrases, wherever they are contained in this Circular, mean the definition described in front of each of them, unless the context of the text states otherwise.

The Authority	:	Zakat, Tax and Customs Authority.
Tax	:	Value added tax.
Law	:	Value Added Tax Law issued by Royal Decree No. M113 dated 1438/11/2H including any amendments that may follow it.
Implementing Regulations	:	Value Added Tax Implementing Regulations issued by GAZT (formerly) Board of Directors Resolution No.3839 dated 1438/12/14 H including any amendments that may follow it.
Unified Agreement	:	Common VAT Agreement of the States of the Gulf Cooperation Council (GCC) issued in November 2016.
Circular	:	Tax Circular relating to the VAT treatment of certain supplies in the financial services industry.
Taxable person	:	Any natural or legal person, public or private, or any other form of partnership.

Treatment of Certain Supplies in the Financial Services Industry

Tax Circular | VAT

Contents

Definitions

Subject matter of this Circular