Many common banking and financial services are exempt from VAT in Saudi Arabia. Under Article 20 of the Saudi VAT Implementing Regulations, supplies of financial services listed in that article are generally VAT-exempt. This covers services such as the provision of credit, operation of current or savings accounts, and similar implicit-fee financial products where the provider earns income through a margin or spread rather than charging an explicit fee.
However, there is an important exception: if a financial service involves an explicit, separately stated fee or commission — for example, a wire transfer fee, a financial advisory charge, or a foreign exchange transaction fee — that service may be subject to VAT at 15%. The distinction between implicit and explicit consideration is key, and banks in Saudi Arabia typically apply VAT only to fee-based services.
As an expat, you may notice VAT added to certain bank service charges on your statements, such as account maintenance fees, international transfer fees, or brokerage commissions. This is expected and lawful under Article 20. If you are a VAT-registered business, check with your accountant whether any VAT paid on explicit financial service fees qualifies as deductible Input Tax under Article 49, as restrictions may apply depending on the nature of your business activities.
This is general legal information, not legal advice. For advice on your specific situation, consult a lawyer licensed in Saudi Arabia.