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May 15, 2026

This ZATCA guideline clarifies the Value Added Tax (VAT) treatment for business promotions in Saudi Arabia. It provides detailed guidance on valuing supplies, applying discounts, and handling non-monetary consideration, referencing key principles from the VAT Law and Implementing Regulations. The document explains the VAT implications for specific promotional tools, including qualifying and non-qualifying vouchers, loyalty programmes, and 'free' goods, establishing the criteria for nominal supplies. It outlines rules for applying fair market value in transactions between related parties and details procedures for adjusting consideration, ensuring accurate tax calculation and compliance.

Business Promotions

VAT Guideline

July 2021

1. Introduction

1.1. Implementing a Value Added Tax ("VAT") system in the Kingdom of Saudi Arabia ("KSA")
1.2. Zakat, Tax and Customs Authority (ZATCA)
1.3. What is Value Added Tax?
1.4. This Guideline

2. Definitions of the main terms used

3. Economic Activity and Registration

3.1. Who carries out an Economic Activity?
3.2. Mandatory registration
3.3. Optional VAT registration

4. Valuation of Supplies

4.1. Consideration

4.1.1. Monetary Consideration
4.1.2. Non-monetary Consideration

4.2. Expenses, fees and other taxes
4.3. Third Party Consideration
4.4. Adjustment to Consideration

4.4.1. Adjustment to output Tax

4.5. Applying Fair Market Value to supplies

4.5.1. Criteria
4.5.2. Calculating Fair Market Value

5. Pricing and Discounts

5.1. Standard retail prices
5.2. Discounted prices

5.2.1. Retrospective discounts
5.2.2. Payment of Customer's expenses
5.2.3. Specific cases

5.3. Volume Discounts
5.4. Discount for early payment

6. Goods and Services sold for a combined price

6.1. Single and multiple supplies
6.2. Allocation of Consideration to individual supplies
6.3. Promotions including "free" goods

7. Vouchers

7.1. What is a "qualifying" Voucher?
7.2. Issue of a Voucher
7.3. Supply of a Voucher
7.4. Redemption of a Voucher for goods or services
7.5. Treatment of "Non-Qualifying" Vouchers

8. Loyalty programmes

8.1. Purchase stamps
8.2. Loyalty points - single supplier schemes
8.3. Multi-party loyalty schemes

9. Input VAT Deduction

9.1. General Provisions
9.2. Proportional deduction relating to input VAT

10. VAT obligations of the Taxable Person

10.1. Issuing tax invoices
10.2. Filing VAT Returns
10.3. Keeping records
10.4. Certificate of registration within the VAT system
10.5. Correcting past errors

11. Penalties

12. Applying for the issue of rulings (interpretative decisions)

13. Contacting Us

14. Common Questions and Answers

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

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