Goods treated as imported into the Kingdom from another Member State under Article 41
Under the Common VAT Agreement, an Import of Goods is defined as the entry of Goods into any Member State from outside the GCC Territory in accordance with the provisions of the Common Customs Law. Goods moving from one Member State into the Kingdom would not ordinarily fall within that definition. Article 41 of the Implementing Regulations, headed "Goods Deemed to be Imports into the Kingdom", addresses a specific case in which such goods are nonetheless treated as imported.
Article 16(1) of the VAT Law provides that Tax shall be due on imports into the Kingdom in accordance with the provisions of the Agreement, and Article 41 sits within Chapter Eight of the Regulations on Imports.
The deemed import
Article 41(1) provides that, in cases where any legal Person or a natural Person who is resident in the Kingdom but who is not registered for VAT enters Goods with a value exceeding ten thousand (10,000) SAR into the Kingdom from another Member State, and cannot prove at the time of such entry that Tax was paid on the purchase of those Goods in such Member State, that Person is deemed to make an Import of those Goods for the purposes of the Law, and VAT shall be payable on such imports.
Each of the following elements must be present:
- The person. The person is either a legal Person, or a natural Person who is resident in the Kingdom and not registered for VAT.
- The movement. The Goods enter the Kingdom from another Member State.
- The value. The Goods have a value exceeding SAR 10,000.
- The absence of proof. The person cannot prove, at the time of entry, that Tax was paid on the purchase of the Goods in that Member State.
Where these conditions are met, the person is treated as making an Import, and VAT is payable on that import.
Proof that tax was paid
Article 41(2) provides that proof of payment of Tax must be made by producing a Tax Invoice or similar document issued in accordance with the laws of the Member State of purchase, or such other evidence accepted by the Customs Department showing that VAT has been paid on the Goods, or that the Goods were not purchased in that Member State.
The evidence therefore can show one of two things: that VAT was paid on the Goods in the Member State of purchase, or that the Goods were not purchased in that Member State at all. The relevant moment is the time of entry, so the documents should accompany the Goods when they enter the Kingdom.
Practical points
- Businesses and individuals bringing goods into the Kingdom from another Member State should keep the purchase Tax Invoice, or equivalent evidence, available at the point of entry.
- The value condition is that the Goods exceed SAR 10,000. Article 41 does not apply to Goods at or below that value.
- Where the conditions are met, the person is treated as making an Import, and the rules of Chapter Eight of the Regulations on imports apply.
Instruments relied on: VAT Law, Article 16(1); Common VAT Agreement, Article 1 (definition of Import of Goods); Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation, Article 41 (not amended by ZATCA Board Resolution No. (01-06-24) dated 17/05/1446H, published in the Official Gazette, Umm Al-Qura issue 5082, on 18 April 2025). The Arabic text prevails.