Applying to form a VAT tax group and the role of the representative member

Once legal persons satisfy the eligibility conditions in Article 10 of the Implementing Regulations, the formation of a tax group proceeds by application under Article 11. ZATCA Board Resolution No. (01-06-24), published in the Official Gazette on 18 April 2025, amended Paragraphs (1), (2) and (6) of Article 11 and added a new Paragraph (7). Paragraphs (3) to (5) were not amended by that Resolution. This article reads the provision as amended.

Appointing the representative

Under the previous text, an application to form a Tax Group had to be made by a Taxable Person, and that Person became the representative member. Amended Article 11(1) provides instead that persons who wish to form a tax group must appoint one of them to be the representative of the group, and the application for the formation of the tax group is submitted by the representative to the Authority.

The representative is considered the representative of the tax group and primarily responsible before the Authority for all obligations and rights arising on the group on behalf of all its members. That primary responsibility is without prejudice to the joint liability of the remaining members of the group among themselves for all tax liabilities, penalties and any other obligations imposed by the Law and the Regulations that arise during their period of membership. This is consistent with Article 4 of the VAT Law, under which all members of a Tax Group are jointly and severally liable for the Tax obligations of the group arising during their membership.

What the application must contain

Amended Article 11(2) requires the application to be submitted using the form prepared by the Authority. The form must include, as a minimum, information about all members of the group as stipulated in Article 8 of the Regulations, which governs the content of a registration application.

The amended paragraph adds a documentary requirement: a copy of the agreement concluded between the members of the group, including the appointment of the tax representative and evidence of the representative’s consent to the appointment. Article 11(2) provides that this agreement is considered an acknowledgment by the tax group to fulfil all terms and conditions related to registration as a tax group. The members’ agreement is therefore part of the regulatory record, not merely an internal arrangement.

Verification, refusal and effective date

The following paragraphs were not amended by Resolution No. (01-06-24):

• Article 11(3) permits the Authority to request the representative to provide any documentation, in electronic or physical form, to verify that the information in the application is valid and that the Persons are eligible to be registered as a Tax Group. The representative must be given a minimum of twenty (20) days from the date of the request to provide it.
• Article 11(4) permits the Authority to refuse the application where the information is not valid or the legal Persons are not eligible, and requires a notification of refusal to the Person making the application.
• Article 11(5) provides that the establishment of the Tax Group takes effect from the first day of the month following the month in which the application is approved, or such later date as the Authority determines.

Registration of the group as a separate taxable person

Amended Article 11(6) provides that, if the Authority accepts the application, the tax group is treated, for the purposes of applying the Law and the Regulations, as a taxable person independent of its member persons. The Authority issues a new registration certificate with a separate tax identification number for the group and notifies the representative. The tax identification numbers of members that were previously registered individually are suspended.

Consequences of group registration under the new Article 11(7)

New Article 11(7) sets out what registration of a tax group entails:

• the conduct of business activity by any member of the tax group is deemed to be conducted by the tax group;
• any supply made by any member of the group is considered a supply made by the tax group;
• any import of goods or services made by a member is deemed to be an import made by the tax group;
• any output tax levied by a member is deemed to be levied by the tax group; and
• any input tax incurred by a member is deemed to have been incurred by the tax group.

Read with Article 18(2) of the Regulations, under which supplies of Goods or services from one member of a Tax Group to another member are not within the scope of Tax, these provisions place the group, rather than its individual members, at the centre of the VAT position for external supplies, imports, output tax and input tax.

Practical implications for the representative

The representative files on behalf of the group and is primarily responsible before the Authority. It must also notify changes within the period in Article 12(1) and may apply on the group’s behalf to add or remove members, subject to the approval of all members under Article 12(3). The members’ agreement required by Article 11(2) is the natural place to record how information, payments and responsibilities will be managed among the members, given their continuing joint liability.

Instruments relied on: Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation, Articles 8, 11, 12 and 18(2), with Article 11(1), (2) and (6) amended and Article 11(7) added 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; VAT Law, Article 4; Common VAT Agreement, Article 4. The Arabic text prevails.

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