Export services at 0% VAT: 4 exceptions
The goods exports lesson left services for this one. Short answer: if your VAT-registered business serves a customer with no place of residence in the Gulf Cooperation Council (GCC), exporting the service is zero-rated by default: you charge the customer no VAT and still deduct VAT on related purchases. But 0% falls away in 4 cases, where the standard 15% usually applies. Here are those cases with ZATCA's examples, then 4 steps for every invoice.
The rule as ZATCA publishes it
Article 33(1) of ZATCA's VAT Implementing Regulations (official Arabic text) zero-rates services supplied by a taxable person to a customer not resident in any GCC member state, except in the four cases of paragraph 2, last amended in November 2024. Section 8 of ZATCA's imports and exports guideline (2nd edition, May 2026) explains them. During the transitional period, other GCC states are treated as outside the GCC, so 0% can apply to a customer established in another GCC state with no establishment in Saudi Arabia, on the same conditions (section 9 of the guideline); hence "in the Kingdom" below. ZATCA's published text governs.
The four cases that remove 0%
| Case in Article 33 | Example from ZATCA's guideline |
|---|---|
| a. A special place-of-supply rule puts it in the Kingdom: vehicle hire, transport starting here, real estate services here, telecom and electronic services used here, hotels, restaurants, and events or teaching held here | An Indian company books a Saudi hotel for its staff: 15% VAT |
| b. The customer is resident in the Kingdom, for example through a branch or office | A German firm with a Saudi branch and staff buys tax advice from a Saudi accounting firm: 15% |
| c. The service is enjoyed directly in the Kingdom by the customer, or by a related person who cannot fully recover its input VAT | An Egyptian resident changes money at Riyadh airport: VAT on the commission |
| d. The service is physically performed on goods located in the Kingdom | Storing and distributing a Korean supplier's goods inside the Kingdom: 15% |
As evidence of residence, the guideline says ZATCA expects an invoice or correspondence to an address outside the GCC; if public information shows a GCC office or branch, check further.
Example: a Jeddah design studio bills a London client
A design studio owner writes to the system:
Owner: Invoice a London company: a full brand identity for 25 thousand riyals and a one-day training workshop for 4 thousand. No VAT, they're outside the Kingdom
System: Before issuing: do they have a branch or office in the Kingdom or the Gulf? And where is the workshop?
Owner: No branch; the contract address is London. The identity is delivered as files by email; the workshop is at our Jeddah office for their visiting team
System: The identity is 0%: the customer is non-resident and uses it outside the Kingdom. The workshop is enjoyed by their team while in Jeddah, so it is not zero-rated: standard rate, 600 riyals. I issued one tax invoice with two lines, 29,600 riyals in total, and filed the contract and London address with it.
Owner: And the VAT return?
System: 25 thousand on the exports line, 4 thousand in standard-rated sales, and VAT on the project's purchases stays deductible.
This is what invoicing over WhatsApp adds: residence and place of use are checked before invoicing, not at audit, and anything in the Kingdom gets its own line.
4 steps for every invoice to a client abroad
- Check where the customer resides: a foreign address in the contract and correspondence, and no branch or office here.
- Ask where the service is performed and used: run the four cases and put anything that falls in the Kingdom on a separate standard-rated line.
- Issue a tax invoice, not a simplified one: Article 53 requires one for zero-rated services to a non-resident customer, by the 15th of the month after the supply; a simplified invoice is allowed only below 1,000 riyals.
- Report it as an export and keep the evidence: line 4 of the return covers exports of goods and services to a non-resident customer, per ZATCA's simplified VAT return guide. Article 49 allows deducting input VAT on purchases tied to zero-rated supplies. Keep the evidence at least 6 years from the end of the tax period (Article 66; see record keeping).