Supplies of goods situated in the Kingdom under Article 26

For goods, the starting point of the place-of-supply analysis is the location of the goods themselves. Article 10 of the Common VAT Agreement provides that the place of a Supply of Goods that occurs without transportation or dispatch shall be the place where the Goods are located on the date they are placed at the Customer's disposal. Article 26 of the Implementing Regulations applies that principle in the Kingdom.

The rule in Article 26(1)

Article 26(1) provides that, except as otherwise provided by the Agreement, the Law or these Regulations, a Supply of Goods situated in the Kingdom, without these goods being transported outside the Kingdom, is made in the Kingdom.

The rule has two elements. The goods must be situated in the Kingdom, and they must not be transported outside the Kingdom as part of the supply. Where both are satisfied, the place of supply is the Kingdom regardless of the residence of the supplier or of the customer. A non-resident seller of goods held in a warehouse in the Kingdom and delivered to a customer within the Kingdom is therefore making a supply in the Kingdom.

Goods outside the Kingdom

Article 26(2) provides that Goods which are situated outside the Kingdom are not considered to be situated in the Kingdom for the purposes of applying the place of Supply rules in the Agreement and the Law. A sale of goods located abroad, which are delivered abroad, is not a supply in the Kingdom under Article 26 merely because the supplier or the customer is resident in the Kingdom.

The exceptions preserved by the opening words

The opening words "except as otherwise provided" preserve the specific rules elsewhere. Several of them are relevant:

• Where goods are supplied with transportation or dispatch, Article 11 of the Agreement places the supply where the Goods are located when the transportation or dispatch commences, and Article 12 contains a special case for Intra-GCC supplies with transportation, read with Articles 27 and 28 of the Regulations.
• Article 14 of the Agreement places the supply of gas, oil and water through the pipeline distribution system, and of electricity, at the place where a Taxable Trader is established or, for other customers, at the place of actual consumption.
• Article 27(3) of the Regulations provides that where transportation of Goods supplied to the Kingdom commences from outside Council Territory, the supply is in the Kingdom if the Goods have been imported into the Kingdom under the Unified Customs Law before the supply takes place, and any supply before import is made outside the Kingdom.
• Article 32 bis of the Regulations, added by ZATCA Board Resolution No. (01-06-24), governs the tax treatment of goods placed under a customs duty suspension situation and of specified special zones.

A business should therefore apply Article 26 only after confirming that none of these specific rules governs the transaction.

Practical documentation

Because Article 26 turns on the location of the goods and on whether they leave the Kingdom, a supplier should keep records that identify where the goods were held when placed at the customer's disposal. Where goods are later transported abroad, the export or internal-supply evidence rules in Articles 32 and 28 of the Regulations become relevant to whether a different treatment is available.

Instruments relied on: VAT Law, Article 13; Common VAT Agreement, Articles 10, 11, 12 and 14; Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation, Articles 26, 27, 28 and 32 (Articles 26 to 28 were not amended by ZATCA Board Resolution No. (01-06-24)); Article 32 bis as added by that Resolution dated 17/05/1446H, published in the Official Gazette, Umm Al-Qura issue 5082, on 18 April 2025, unofficial English translation. The Arabic text prevails.

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