Who is a Taxable Person required or eligible to register for VAT
For the purposes of the Value Added Tax Law and the Implementing Regulations, a Taxable Person in the Kingdom is a Person who conducts an Economic Activity independently for generating income and who is registered for VAT in the Kingdom, or who is required to register for VAT in the Kingdom under the Law or the Regulations. That definition in Article 2 of the Regulations anchors who must, or who may, enter the registration framework. It is read together with the Agreement definitions of Taxable Person and Economic Activity, and with the registration obligation in Article 3 of the Law.
The Article 2 definition
Article 2 of the Implementing Regulations states that, for the purposes of the Law and these Regulations, a Taxable Person in the Kingdom is a Person who conducts an Economic Activity independently for generating income and is registered for VAT in the Kingdom or who is required to register for VAT in the Kingdom under the Law or these Regulations. Two elements therefore sit together: independent conduct of an Economic Activity for generating income, and either actual registration or an obligation to register under the Law or the Regulations.
The definition does not itself prescribe the Mandatory Registration Threshold, the thirty-day application periods, or the effective date of registration. Those rules appear in later Articles of the Regulations and in the Agreement. Article 2 identifies who is treated as a Taxable Person once those other provisions apply.
Agreement definitions of Taxable Person and Economic Activity
Article 1 of the Common VAT Agreement defines a Taxable Person as a Person conducting an Economic Activity independently for the purpose of generating income, who is registered or obligated to register for VAT in accordance with the provisions of the Agreement. That Agreement definition is consistent in structure with Article 2 of the Regulations: independent Economic Activity for income, plus registration or an obligation to register.
Article 1 of the Agreement defines Economic Activity as an activity that is conducted in an ongoing and regular manner including commercial, industrial, agricultural or professional activities or Services or any use of material or immaterial property and any other similar activity. The Agreement definition does not, in that paragraph, restate the employment exclusion. Article 9(6) of the Regulations separately provides that Economic Activity does not include the activity practiced by workers and other persons to the extent that they are contractually connected with the employer or linked to any other link under which the work relationship is established for the purposes of registration.
The registration obligation in the Law
Article 3 of the Value Added Tax Law obliges a Taxable Person to register according to the Economic Activities carried out in the Kingdom and in accordance with the Agreement. The Law provision states the general registration obligation. The detailed tests for when a Resident Person must apply after historic or expected supplies exceed the Mandatory Registration Threshold, when a Nonresident must apply from the first Supply on which Tax is due, and when voluntary registration is available, are set out in Articles 3 to 7 and 9 of the Regulations and in Articles 50 to 52 of the Agreement.
What Article 2 does not determine
Article 2 does not set the figure of the Mandatory Registration Threshold or the Voluntary Registration Threshold. It does not state when registration takes effect, the form of the application, or the Authority’s power to register a Person without an application. It does not determine whether a particular activity is an Economic Activity beyond the definitional framework described above, nor does it set out the government-body, Related Persons, or exclusively zero-rated exclusions and elections in Article 9 of the Regulations. Those questions are answered by the provisions that address them.
Instruments relied on: Value Added Tax Law, Article 3, English text of the bilingual instrument (identified in the preamble to Resolution No. (01-06-24) as issued by Royal Decree No. (M/113) dated 02/11/1438H corresponding to 20/07/2017G, as amended); Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation (Article 2 was not amended by the text of ZATCA Board Resolution No. (01-06-24) relied on here); Common VAT Agreement, Article 1, executed in Arabic on 27/2/1438H corresponding to 27/11/2016. The Arabic text prevails.