In brief
Article 61 requires foreign-currency amounts to be converted to SAR using the SAMA daily rate on the date the tax becomes due — which is the date of supply, not the payment date.
Saudi Arabia conducts enormous volumes of international trade and services procurement in currencies other than SAR. Every one of those foreign-currency transactions that carries a Saudi VAT obligation requires a conversion to Riyals — and the law is specific about which rate to use, on which date. Using the wrong rate, even by a small margin, produces incorrect VAT declarations across every affected transaction. At scale, the cumulative impact is material.
The Rule: Article 61
Article 61 of the VAT Implementing Regulations is the governing provision:
Three elements are critical:
- The rate source: Saudi Arabian Monetary Authority (SAMA) — not any commercial bank rate, internal treasury rate, or interbank market rate
- The rate type: The daily rate — not a monthly average, not a month-end rate, not a year-to-date average, and not a budget or forecast rate
- The date: The date the tax becomes due — which is the date of supply, determined under the supply rules in the Agreement and Law, not the date of payment
The GCC VAT Agreement (Article 56(2)) also establishes this principle at treaty level: tax invoices can be issued in any currency, but the value of the tax must be written in the currency of the Member State where the place of supply is located, based on the official exchange rate in force in that state on the tax due date.
Which Date: The Tax Due Date Is Not the Payment Date
The single most common source of currency conversion errors in Saudi VAT compliance is using the payment date rather than the tax due date (date of supply) as the conversion reference point. These are often different — sometimes by days, sometimes by months.
| Rate Reference Point | Compliant? | Why |
|---|---|---|
| SAMA daily rate on date of supply (tax due date) | Correct | Article 61 requires this specifically |
| SAMA daily rate on date of payment | Incorrect | Payment date ≠ tax due date in most cases |
| SAMA daily rate on date of invoice receipt | Incorrect | Invoice receipt date ≠ tax due date |
| Month-end SAMA rate | Incorrect | Not the rate on the tax due date |
| Average monthly SAMA rate | Incorrect | Not the rate on the tax due date |
| Commercial bank published rate | Incorrect | Article 61 requires the SAMA rate specifically |
| Internal treasury / budget rate | Incorrect | Not a SAMA rate and not a daily rate on the supply date |
Currency on the Tax Invoice
Article 53(5)(j) of the Implementing Regulations requires that the VAT amount payable be shown on the tax invoice in SAR. This applies regardless of the currency of the underlying transaction. A USD invoice, a EUR invoice, or a GBP invoice must each carry a SAR-equivalent VAT figure — calculated at the SAMA daily rate on the tax due date.
The transaction amount itself may be stated in any currency. The VAT on that transaction must be converted and shown in Riyals. An invoice that states the VAT as “USD 1,500 (equivalent SAR 5,625)” satisfies the requirement. An invoice that shows only “USD 1,500 VAT” does not.
Where to Find the SAMA Daily Rate
SAMA publishes official daily exchange rates on its website. Rates are published for all major currencies against the SAR. The rate relevant for VAT purposes is the SAMA daily rate published for the date on which the tax becomes due.
For internal compliance purposes, the rate retrieval and storage process must be:
- Date-specific: The rate is pulled for the exact date of supply — not a nearby date, not a default date
- Documented: The rate used and the date from which it was sourced must be retained alongside the VAT calculation for each transaction
- Consistent: The same source (SAMA) must be used for all transactions — not SAMA for some and commercial bank rates for others
- Systematic: For high-volume transactions, the rate retrieval should be automated through an API or systematic daily pull — not performed manually and inconsistently
During a ZATCA audit, the auditor will ask the business to produce evidence of the exchange rate used for each foreign-currency VAT calculation. If the business cannot demonstrate that the SAMA daily rate on the correct date was used, the calculation is challenged and the correct VAT is reassessed.
ERP Configuration Risk
Most enterprise accounting systems have currency conversion functionality built in — but it is typically configured for financial reporting purposes, not for VAT compliance. Common misconfigurations include:
- Default to payment date rate. Many ERPs apply the exchange rate on the date a payment is posted, not the date of supply. For VAT purposes, this is systematically wrong.
- Monthly average rate tables. Some financial systems load monthly average rates for the entire month. These are used for P&L translation purposes and have no role in VAT calculations.
- Single rate per currency period. Systems that carry one rate per month for each currency cannot produce the day-specific SAMA rate required.
- Bank feed rates. Rates pulled from bank transaction data reflect the bank’s own FX spread, not the SAMA official rate.
Businesses with significant foreign-currency transaction volumes should specifically configure their VAT calculation workflow to use SAMA daily rates on supply dates — separately from their financial reporting FX configuration. Where this is not possible within the system, a manual override or documented supplementary calculation process must be in place.
Key takeaways
- Article 61 requires foreign-currency amounts to be converted to SAR using the SAMA daily rate on the date the tax becomes due — which is the date of supply, not the payment date.
- No other rate is permitted: not commercial bank rates, not monthly averages, not month-end rates, not budget rates, and not internal treasury rates.
- The VAT amount on every tax invoice must be expressed in SAR, even where the transaction is denominated in a foreign currency.
- Foreign supplier invoices showing VAT in foreign currency only are non-compliant. The Saudi customer receiving such an invoice must calculate and document the SAR equivalent using the SAMA rate on the supply date.
- The SAMA rate used, the date it was sourced, and the calculation workings must be retained alongside each affected invoice as part of the VAT audit trail.
- Most ERP systems are configured for financial reporting FX purposes, not VAT compliance. The VAT conversion workflow must be specifically configured to use SAMA daily rates on supply dates — and tested to confirm it is working correctly.
- Systematic FX rate errors across a large volume of foreign-currency transactions compound quickly. A regular reconciliation of FX rates used in VAT calculations against SAMA published rates is a prudent control.
