GTL Summary:

Document Type: IR - Implementing Regulations
Law: Value Added Tax Law
Decision Number: 3839-article-15
Year: 2016
Country: 🇸🇦 KSA
Official Name: Article 15 - Deemed Supply
Last updated at: 2025-11-27 14:38:44 UTC

Chapter 3 - Supplies of Goods and Services

Article 15 - Deemed Supply

  1. The taxable person shall be deemed to have made a supply of goods or services in cases of deemed supply as provided for in the Agreement, the Law, and the Regulations, unless otherwise stated in this Article. [24]

  2. For the purposes of implementing the provisions of the Agreement and the Law, a supply of services shall include any transaction that does not constitute a supply of goods, including but not limited to the following:

    1. a Taxable Person Supplies gifts or samples to promote its Economic Activity, provided the Fair Market Value of each gift or sample supplied without Consideration does not exceed two hundred (200) SAR exclusive of VAT per recipient per calendar year; and

    2. a Taxable Person provides Goods to its employees as a part of carrying on its Economic Activity, provided the Fair Market Value of the Goods supplied without Consideration does not exceed two hundred (200) SAR exclusive of VAT per recipient per calendar year.

  3. The maximum annual value of Supplies of gifts, samples and Goods which a Taxable Person may make without Consideration and still be eligible to apply the relief in the first Paragraph of this Article, is fifty thousand (50,000) SAR in any calendar year based on the Fair Market Value of those gifts, samples and Goods.

  4. In cases where Goods are not used for the Economic Activity of a Taxable Person due to the destruction, theft or loss of those Goods the Taxable Person does not make a Deemed Supply of those Goods.

  5. A Supply of services is not treated as a Deemed Supply in cases where a Taxable Person Supplies services without Consideration, and these services are provided to promote the Economic Activity of a Taxable Person or provided to employees in as a part of carrying on the Economic Activity, provided the Fair Market Value of each Supply of service does not exceed two hundred (200) SAR per person per calendar year.

  6. The maximum annual value of services which a Taxable Person may make without Consideration and still be eligible to apply the relief in the fourth Paragraph of this Article, is fifty thousand (50,000) SAR in any calendar year based on the Fair Market Value of those services.

  7. The taxable person shall be deemed to have made a supply transaction of goods upon retaining goods after ceasing to conduct economic activity, or upon being deemed ineligible for registration in accordance with the Law and these Regulations.[25]

  8. In the event that the taxable person incurs value added tax on direct costs related to the import, purchase, or production of goods or services associated with the deemed supply and has deducted or recovered part of such tax, the deemed supply value shall be adjusted to reflect the proportion of tax that has been deducted or recovered.[26]

  9. A Supply is not considered a Deemed Supply where the Taxable Person supplies Goods or Services for no Consideration if that the Person had previously incurred Input Tax on the direct cost related to the purchase, production or supply of those goods or services without deducting the Tax from his Tax Returns, while retaining documentary evidence supporting the absence of deduction or recovery.[27]

Footnotes

[24] This paragraph was amended pursuant to the decision of the Board of Directors of the Zakat, Tax and Customs Authority No. (01-06-24) dated 17 Jumada al-Awwal 1446 AH, corresponding to 19 November 2024. Prior to the amendment, paragraph 1 read as follows:
'A Nominal Supply of Goods or services, made by a Taxable Person is treated as a Supply of Goods or services by the Taxable Person for Consideration as part of the Taxable Person’s Economic Activity, except as otherwise provided by this Article.'

[25] This paragraph was amended pursuant to the decision of the Board of Directors of the Zakat, Tax and Customs Authority No. (01-06-24) dated 17 Jumada al-Awwal 1446 AH, corresponding to 19 November 2024. Prior to the amendment, paragraph 7 read as follows:
'The Nominal Supply made on ceasing an Economic Activity will take place on the date of deregistration and be based on the Fair Market Value of the Goods retained at this date.'

[26] This paragraph was amended pursuant to the decision of the Board of Directors of the Zakat, Tax and Customs Authority No. (01-06-24) dated 17 Jumada al-Awwal 1446 AH, corresponding to 19 November 2024. Prior to the amendment, paragraph 8 read as follows:
'In cases where the Taxable Person only deducts a part of the Input Tax on the purchase of Goods and services or Import of Goods directly linked to any Nominal Supply, the value of the Nominal Supply will be adjusted to reflect only the proportional amount of VAT deducted.'

[27] This paragraph was amended pursuant to the decision of the Board of Directors of the Zakat, Tax and Customs Authority No. (01-06-24) dated 17 Jumada al-Awwal 1446 AH, corresponding to 19 November 2024.
Prior to its amendment, this paragraph was added pursuant to the decision of the Board of Directors of the General Authority of Zakat and Income No. (7-2-20) dated 12 Sha'ban 1441 AH, corresponding to April 5, 2020, and read as follows:
'A Supply is not considered a Deemed Supply where the Taxable Person supplies Goods or Services for no Consideration if that the Person had previously incurred Input Tax on the direct cost related to the purchase, production or supply of those goods or services without deducting the Tax from his Tax Returns.'

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