Saudi VAT Designated-Person Refunds: Eligibility and Claims

Article 70 provides a special VAT refund framework for approved eligible persons. It is different from an ordinary VAT-registered taxpayer’s credit refund under Article 69. Eligibility depends on designation, the applicable category requirements and ZATCA registration; it is not automatic because a purchaser is charitable, diplomatic, outside business or a licensed developer. The claim must also satisfy expense, evidence, period and minimum-value rules.

Designation and registration are separate steps

Article 70(1) empowers the Minister of Finance to allow categories to apply for eligibility to recover VAT borne and paid on taxable Saudi purchases. The Board or its delegate issues the requirements each category must meet. Paragraph (2) lists categories that may be designated, including foreign governments, international organisations, specified diplomatic/consular/military bodies and accredited persons; charitable bodies, foundations, associations and public-benefit endowments and equivalents; and persons outside economic activity or conducting a specified economic activity.

These are categories within a framework, not a promise that every person fitting a broad description qualifies. Paragraphs (3)-(5) address application, review, supporting information, reasons for rejection, the identification number upon acceptance and ZATCA’s eligible-person list. The number must appear on refund claims and correspondence. The nonprofit guideline, second issue May 2026, section 10.1, p. 16, explains that this refund identification number differs from a taxable person’s tax number.

Tourist refunds and other special arrangements need their own provisions considered; the former article’s grouping of tourists and disabled persons as automatic Article 70 entitlements was too broad. Nor does Article 70 mean an eligible person can never also conduct taxable activities.

Official nonprofit examples: use determines the route

ZATCA’s VAT Refund for the Non-Profit Sector guideline, second issue May 2026, section 5, Example 1, p. 11, describes a nonprofit endowment buying water for free distribution to visitors of the Prophet’s Mosque. It is not required to register as a taxable person. The water costs SAR 100,000 plus 15% VAT, producing SAR 115,000 total. The guideline permits an application for registration as eligible for refund; it does not say registration or payment of the refund is automatic.

Dariba calculation: VAT on those stated facts is SAR 15,000. Actual recovery still requires approval, eligible activity and a compliant claim. Do not describe the charity as making a zero-rated sale merely because distribution is free.

Example 2, section 5, pp. 11–12, concerns Ahmad’s commercial-building endowment, with estimated income of SAR 400,000 used for public charitable purposes. The guideline treats the commercial activity as taxable and requires taxable-person registration, with qualifying input deduction through that route. Spending rent on charitable purposes does not turn a taxable commercial supply into a non-business activity.

Section 7.1, pages 12–13, also recognises mixed cases: an entity with taxable revenues may first register as a taxable person and be accepted as refund-eligible only for the other qualifying part, subject to the licensing and public-benefit criteria. The two examples should not be extrapolated into a universal prohibition on dual status.

Establish the effective eligibility date

Article 70(6) ordinarily links qualifying paid VAT to eligible activity and a tax invoice or customs document dated on or after the registration application’s submission. It permits ZATCA, in specified cases and subject to Board requirements, to approve an earlier date. The notice records registration, the date from which refund may be claimed and the periods in which those amounts may be included.

Dariba recommendation: retain that notice beside the claim schedule. Neither incorporation, the first purchase nor charitable licensing alone establishes the effective refund date. Historic purchases need the actual approved position; an assumed retrospective entitlement can invalidate an otherwise well-documented claim.

Use the approved period and the current deadline

Under Article 70(7), claims may concern a quarter or calendar year, with monthly periods possible in specified cases under Board controls. The registration approval notice specifies the period. ZATCA may change it once every twelve calendar months, on a reasoned request or at its discretion, notifying the new period and effective date. This is not an unrestricted ability to switch periods for each claim.

Article 70(8) requires submission within six months from the relevant refund period’s end. There can be only one application for each period, and an application cannot be amended after submission. Completeness review before filing is therefore particularly important.

A conflict in the official guideline: section 11.2 of the May 2026 nonprofit guideline, p. 18, correctly states the six-month rule, but the older 2022 timetable immediately above it still uses 30 June 2023 dates across several quarters. Do not apply that historical table as the general timetable for current claims. Current Arabic Article 70(8) and the updated section 11.2 control the rule discussed here; any claimed category-specific or transitional treatment needs its own authority checked.

Monthly/quarterly applications may include paid VAT on earlier tax invoices back to the start of the relevant calendar year under paragraph (8)‘s exception. It does not permit invoices from any earlier year, dispense with eligibility dates, or allow double recovery of invoices already claimed. The wording of that earlier-invoice exception should not automatically be extended to every older customs document.

Calculate eligible VAT before testing SAR 5,000

Article 70(9) excludes tax deductible through ordinary VAT rules in relation to the person’s taxable economic activity. Where costs relate both to refund-eligible activity and other supplies and the refundable portion cannot be separately identified, it directs use of Article 51’s proportional method. Directly identifiable costs should first be assigned to the correct activity; an invented allocation percentage is not a substitute for the applicable calculation.

Paragraph (10) excludes the Article 50 restricted categories, subject to the stated exception for specified foreign-government, international and diplomatic categories on reciprocity or treaty terms. That exception is not a general exemption from all claim conditions. Ordinary staff hospitality, restricted vehicles or personal expenditure cannot simply be included because the purchaser pursues public benefit.

Paragraph (11) prohibits a claim totalling less than SAR 5,000 of VAT. Exactly SAR 5,000 meets the value threshold, subject to all other conditions. The threshold concerns eligible VAT, not gross invoices or blocked VAT. The nonprofit guideline section 8, pp. 13–14, confirms this distinction and recommends considering an annual period where monthly eligible VAT is expected to be too low, subject to the period-change rules.

Dariba illustration — original figures: an approved person’s schedule contains SAR 6,200 VAT, including SAR 1,500 that is actually blocked. Eligible VAT is SAR 4,700, below the threshold. It is not a valid SAR 6,200 claim merely because that total was paid. Do not create fictitious eligibility to reach the minimum; assess the available approved-period options and timing.

Assemble the documents in the claimant’s name

Article 70(12) requires the designated form and at least supplier name/tax number; invoice or customs-document number and date; total amount; payment date; VAT amount; description; refund bank details; and any further required information/documents. Section 11 of the nonprofit guideline, page 17, is a useful introduction, but its shorter list should not replace the fuller current regulatory requirements.

Under paragraph (13), retain entitlement records, particularly tax invoices or customs documents in the eligible person’s name and proof of VAT payment. A simplified invoice lacking the claimant’s name cannot ordinarily support this refund; the paragraph specifies an exception for the listed foreign-government/international/diplomatic categories subject to reciprocity or international agreements. This is a distinct special-refund rule, not a universal ban on simplified-invoice evidence for ordinary taxable-person deductions.

Paragraph (13) ordinarily requires the relevant records for at least six years from the refund period’s end, with its stated diplomatic/foreign-category exception on reciprocity or agreement terms. Other applicable record duties still need consideration.

Check any actual paragraph 20 decision

Article 70(20) adds a delegated power to the framework. As an exception to the Article’s invoice provisions, the Board or its delegate may allow VAT recovery against a simplified tax invoice for certain categories of refund-eligible persons. The Board may also establish other refund procedures not set out in the Article.

Read paragraph (13)‘s ordinary claimant-name requirements and its stated foreign/diplomatic exception with this additional power. It would be too broad to say that no further category could ever receive permission to use simplified invoices. It would be equally wrong to treat paragraph (20) as automatic permission for every charity, developer or other approved person to claim against an unnamed receipt.

Dariba analysis: establish the actual applicable decision, the category it covers, any invoice and claim conditions, and its effective period before relying on a different procedure. Refund-eligible registration alone does not establish that a paragraph (20) decision applies. This guide does not identify or certify a category-specific decision under that power, and ordinary taxable-person deduction evidence under Article 49(7) remains a separate question.

Source: current Arabic VAT Regulations, Article 70(20), p. 75, read with Article 70(12)–(13). The enabling power and an actual effective decision are distinct parts of the evidence.

Licensed developers require their specific conditions

Article 70(14) permits a licensed real estate developer carrying on that economic activity to apply for eligible-person registration for paid VAT on related Saudi goods and services, subject to ZATCA’s conditions. It also permits additional developer-specific rules and procedures.

The paragraph is not a blanket right to recover every cost of residential property, exempt leasing or any activity involving a real estate licence. Establish the developer’s actual approval, relevant activity and costs, and the applicable category rules. This article explains the Article 70 framework; it does not certify qualification under every current developer-specific scheme. The nonprofit guideline’s treatment of real estate does not itself establish developer eligibility.

Requests, payment and correcting an undue refund

Article 70(15) allows invoice copies and further information in paper or electronic form and requires the eligible person to supply requested material within twenty business days from ZATCA’s request, with rejection possible on noncompliance. The nonprofit guideline section 13, page 19, instead describes a period specified by ZATCA of at least twenty days. Use the controlling regulatory business-day requirement and the actual notice; seek clarification of inconsistent instructions promptly rather than assuming the longer period is available.

Paragraph (16) requires payment of the approved amount to the specified bank account within thirty business days from notification of whole/partial approval, subject to permitted offset against tax, penalties or other amounts due to ZATCA. This is not thirty days from submitting a claim. Paragraph (18) applies the examination/assessment and objection provisions of Articles 64 and 68 and the Authority’s collection procedures.

If an undue or incorrect refund has actually been recovered, paragraph (17) requires proactive notification immediately upon awareness and repayment under ZATCA’s procedures. The prohibition on amending a submitted claim is not permission to retain an incorrect payment. Equally, do not import Article 63’s small-error return adjustment mechanism as an automatic substitute for this special-refund duty.

Eligibility can end while liabilities remain

Article 70(19) permits cancellation for loss of eligibility requirements, deliberate repeated unjustified refunds, or a Ministerial decision removing a category. ZATCA must notify cancellation and its effective date. Cancellation does not remove amounts owed from before cancellation.

Dariba recommends reconciling eligibility status, approved period, expense classifications, invoice identity, payment evidence, prior claims and outstanding information requests before submission. That review connects the legal framework to a defensible claim; it does not replace the actual designation, approval notice or category-specific requirements.