The Zakat, Tax and Customs Authority, which is the competent authority for all tax-related matters, defines it as an indirect tax imposed on the import and supply of goods and services at all stages of the supply chain, from production to distribution. It is collected from the first supplier when selling their goods to the distributor and transferring the tax value, and the chain continues until the last stages of sale, where the tax is collected up to the final stage of sale to the consumer. Who is the taxable person subject to Value Added Tax (VAT)? The regulations define a taxable person as "a person who independently conducts an economic activity for the purpose of generating income" and is required to register mandatorily based on estimated calculations at the end of each month, specifically when the value of their supplies during the twelve months preceding the calculated month exceeds the mandatory registration threshold, or when the expected value of their supplies during the next twelve months exceeds this threshold. What is the mandatory registration threshold for VAT? Regulations in the Kingdom determine the conditions for mandatory VAT registration, which require that the value of the taxpayer's annual supplies exceeds 375,000 SAR. As for the minimum threshold for voluntary registration, a merchant who is not obligated to register may request registration, provided that the value of their annual supplies is not less than 187,500 Saudi Riyals. To verify the readiness of your establishment after registering for VAT, several steps must be followed: First: Distribute responsibilities among the establishment's employees and allocate a department or person in charge—depending on the establishment's size—to outline the establishment's policy for recording tax invoices and paying the tax in accordance with the VAT Law and its implementing regulations. Second: Verify the establishment's electronic invoicing system and its compatibility with tax requirements. Third: Display the prices of goods and services inclusive of tax. Fourth: Organize the submission of tax returns and ensure there is a team or person responsible for managing tax accounts and submitting returns on time. As an exception to the above, some sectors are exempt from applying VAT, such as the education sector. Additionally, some supplies, such as medicines and medical devices, are subject to a zero-percent tax rate under certain controls. Furthermore, financial service supplies, such as issuing, transferring, or any dealing in securities or banknotes, are exempt. For more details on these exceptions, please view the Implementing Regulations of the VAT Law here.