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In a significant shift to its digital tax policy, Saudi Arabia will place VAT collection responsibilities on electronic marketplaces facilitating the sale of digital services by non-resident and non-VAT registered local suppliers, starting January 1, 2026.
The amendments, published by the Zakat, Tax and Customs Authority (ZATCA), alter the VAT Implementing Regulations by introducing “deemed supplier” rules for marketplaces acting as intermediaries in consumer-facing digital transactions.
Read More: The New Saudi VAT Framework: Why ZATCA’s 2025 Reforms Signal a Global Pivot
Under the updated Article 47, electronic platforms that facilitate taxable digital supplies within the Kingdom will be regarded as the supplier of record. This means they will be liable to charge, collect, and remit VAT, as well as maintain transaction records and ensure full compliance with VAT regulations on behalf of non-resident sellers.
Non-Resident Supplier Provisions
When an overseas business sells digital services, such as streaming, software downloads, or cloud storage; to Saudi consumers through an online platform, the platform will now be deemed the supplier. The VAT liability thus shifts from the offshore seller to the intermediary.
However, this deemed supplier rule may not apply if:
- All supply documentation clearly identifies the non-resident as the supplier;
- The marketplace exerts no control over pricing, payment, complaints, or customer compensation.
If all these criteria are met, the non-resident seller retains tax responsibility.
Implications for Unregistered Resident Sellers
Similar obligations will extend to Saudi-based businesses that are not VAT registered. When such local suppliers offer services via a platform, the platform becomes the deemed supplier; unless the transaction fully discloses the local seller’s role and preserves a direct customer relationship in compliance with Saudi regulations.
When Platforms Are Exempt
Marketplaces can avoid supplier status if their function is limited to:
- Processing payments;
- Advertising or marketing services;
- Redirecting users to third-party platforms that complete the transaction.
Global Trend Toward Platform Taxation
The move mirrors broader trends in OECD and Gulf tax policy, which aim to close VAT gaps in the digital economy by targeting platforms as central nodes of transaction control. Saudi Arabia’s policy aligns it with jurisdictions such as the EU, Australia, and the UAE, which have implemented similar deemed supplier models for cross-border e-commerce.
Business Preparation Urged
With less than a year until implementation, platforms targeting Saudi consumers must urgently assess their exposure and begin adapting systems, contracts, and compliance practices. The burden of proof will fall on marketplaces to demonstrate exemption eligibility or face full VAT liability.
ZATCA’s direction is clear: intermediaries can no longer operate at arm’s length when facilitating digital services from outside the Kingdom. For the digital economy in Saudi Arabia, 2026 marks a new era of platform accountability.
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