GTL Summary:

Document Type: IR - Implementing Regulations
Law: Value Added Tax Law
Decision Number: 3839-article-50
Year: 2016
Country: 🇸🇦 KSA
Official Name: Article 50 - Goods and Services Deemed to Be Received Outside of Economic Activity
Last updated at: 2025-11-27 14:38:44 UTC

Chapter 9 - Calculation of Tax Payable

Article 50 - Goods and Services Deemed to Be Received Outside of Economic Activity

  1. A Taxable Person shall not be considered to have incurred expenses relating to the following Goods or Services for the purposes of carrying on an Economic Activity, and shall not be entitled to deduct the Input Tax incurred on such expenses, unless the Taxable Person re-supplies those Goods or Services as Taxable Supplies:[75]

    1. Any form of entertainment, sporting, or cultural services, or attendance at events of an entertainment nature.

    2. Hospitality services and the supply of food and beverages, unless the Taxable Person is under a legal obligation to provide such services to its employees at the place of work under any law in force in the Kingdom.

    3. Insurance or healthcare services provided to the Taxable Person’s employees and their families, unless the Taxable Person is under a legal obligation to provide such services to its employees under any law in force in the Kingdom.

    4. The purchase or lease of restricted motor vehicles as defined in paragraph (2) of this Article.

    5. Insurance for restricted motor vehicles or the performance of any repair, modification, maintenance, or other similar services in respect thereof.

    6. The supply of fuel used in restricted motor vehicles.

    7. Any Goods or Services designated for personal use or for any purposes other than the purposes of the Activity.

  • A “restricted motor vehicle” means any vehicle designed to transport not more than ten (10) persons. The following are excluded from the definition of a restricted motor vehicle:[76]

    1. Trucks, vans, and similar heavy equipment that are used exclusively for the purposes of an Economic Activity and are not made available for private use.

    2. Vehicles that are supplied for the purpose of sale, resale, or supply as a Taxable Supply by way of sale or lease, or used in any similar activity.

    3. Vehicles designated as emergency vehicles such as ambulances, fire, security, and patrol vehicles.

    4. Vehicles that are used exclusively for the purposes of an Economic Activity and are not made available for private use.

  • In cases where a Restricted Motor Vehicle is treated under the first Paragraph of this Article as not being purchased in the course of an Economic Activity, any Supply of that Restricted Motor Vehicle by the Taxable Person will not be considered to be made in the course of his Economic Activity.

  • Notwithstanding the first Paragraph of this Article, the purchase of any services listed in that Paragraph which are intended for onward sale, without use by that Taxable Person, are considered to be effected in the course of carrying on that Taxable Person's Economic Activity.

    • Footnotes

    [75] This paragraph was amended pursuant to the decision of the Board of Directors of the Zakat, Tax, and Customs Authority, by circulation No. (01-06-24) dated 17 Jumada al-Awwal 1446 AH (corresponding to 19 November 2024).
    Prior to the amendment, this paragraph read as follows:

    1. Expenditure relating to the following Goods or services is not considered to be incurred bythe Taxable Person in the course of carrying on his Economic Activity, and consequently the Taxable Person will not be permitted to deduct the Input Tax relating to such expenditure,save where the Goods or services are to be directly supplied onwards as a Taxable Supply by the Taxable Person:

      1. Any form of entertainment, sporting or cultural services.

      2. Catering services in hotels, restaurants and similar venues.

      3. The purchase or lease of Restricted Motor Vehicles, as defined in the second Paragraph of this Article.

      4. Repair, alteration, maintenance or similar services on Restricted Motor Vehicles.

      5. Fuel used in Restricted Motor Vehicles.

      6. Any other Goods and services used for a private or non-business purpose.

    [76] This paragraph was amended pursuant to the decision of the Board of Directors of the Zakat, Tax, and Customs Authority, by circulation No. (01-06-24) dated 17 Jumada al-Awwal 1446 AH (corresponding to 19 November 2024).
    Prior to the amendment, this paragraph read as follows:

  • A Restricted Motor Vehicle is any vehicle designed to be used on the road unless the vehicle is either:

    1. used exclusively by the Taxable Person or by its employees for work purposes, without being made available for any private use,

    2. primarily intended for resale by the Taxable Person or otherwise for use in an Economic Activity supplying that vehicle.

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