Qualified military goods supplied to the armed forces and internal security forces under Article 36 bis

Article 10 of the VAT Law provides that the Regulations shall determine the zero-rated Supplies and the terms and conditions required in relation to them. Article 36 bis of the Implementing Regulations, added by Board Resolution No. (05-09-22) dated 05/05/1444H corresponding to 29/11/2022G, establishes a zero rate for certain supplies of military goods. Paragraph (2) of that Article was then amended by ZATCA Board Resolution No. (01-06-24), published in the Official Gazette on 18 April 2025.

The zero-rated supply

Article 36 bis(1) provides that the supply of qualified military goods to the armed forces and government internal security forces in all their sectors, which is made through a taxable person registered with ZATCA and licensed in the field of military industrialization by the General Authority for Military Industries, is subject to the zero rate.

The provision therefore requires all of the following:

• the goods are qualified military goods within Paragraph (2);
• the customer is the armed forces or the government internal security forces, in any of their sectors; and
• the supply is made through a taxable person who is both registered with ZATCA and licensed in the field of military industrialization by the General Authority for Military Industries.

Qualified military goods, as amended

Before the 2025 amendment, Article 36 bis(2) defined qualified military goods as locally manufactured military goods meeting two requirements: that the goods were manufactured locally by the same supplier who applies the zero rate, and that the supplier held a certificate from the General Authority for Military Industries.

As amended by ZATCA Board Resolution No. (01-06-24), Article 36 bis(2) now provides that qualified military goods, for the purposes of applying the Article, mean locally manufactured military goods, provided that the supplier has obtained a certificate of supply of qualified military goods from the General Authority for Military Industries confirming that the supply fulfills all the requirements and controls mentioned in the Article.

The amended text continues to require that the goods be locally manufactured and that a certificate be obtained from the General Authority for Military Industries. It no longer states the separate requirement that the goods be manufactured by the same supplier who applies the zero rate. The Resolution provides that its amendments are effective from the date of publication in the Official Gazette.

The zero rate is limited to eligible supplies

Article 36 bis(3) provides that the zero rate shall be applied only to supplies that meet all the requirements and controls mentioned in the Article on the tax due date and within the limits of the amount of eligible goods. Two consequences follow:

• the conditions are tested on the tax due date of the supply, so a certificate obtained after that date does not satisfy the condition for that supply; and
• the zero rate applies only up to the amount of eligible goods. Where a contract also covers goods or services that are not eligible, those elements are not zero-rated under this Article.

Article 36 bis(4) provides that the Governor of ZATCA, in coordination with the General Authority for Military Industries, may issue additional regulations related to the application of the Article. Suppliers should therefore also consider any such regulations issued under that power.

Instruments relied on: VAT Law, Article 10; Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation, Article 36 bis, with Paragraph (2) as 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, unofficial English translation. The Arabic text prevails.

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