Guide
Which expenses can't you claim input VAT on in Saudi Arabia?
In Saudi Arabia you cannot deduct input VAT on expenses that are not for your taxable business, on costs linked to VAT-exempt supplies, and on the restricted expenses listed in Article 50 of the VAT Implementing Regulations, which include entertainment services, cultural services, food services and restricted vehicles. On these bills the VAT is part of the expense, even when the supplier's tax invoice is valid.
What does ZATCA list?
- Not for your business: costs that are not part of your economic activity
- Exempt supplies: costs linked to supplies that are exempt from VAT, such as some financial services and real estate; mixed costs are split in proportion
- Restricted expenses (Article 50): entertainment services, cultural services, food services and restricted vehicles
Amendments to the Implementing Regulations in 2025 were reported to widen and clarify this list, for example for events, hospitality and employee health insurance. See EY's summary and check the current text of Article 50 on zatca.gov.sa.
How should you book these bills?
- Book the full amount, VAT included, to the expense account.
- Do not put the VAT in the input VAT account.
- Keep the tax invoice anyway: it is still your record of the purchase.
Which common bills are usually fine?
Stock and materials for resale or production, rent of business premises, utilities, fuel for business vehicles that are not restricted, professional fees and equipment for the business are usually claimable when the supplier's tax invoice is valid.
Source: ZATCA Guideline for Tax Invoicing and Records, v3, May 2026, section 9 (Implementing Regulations Articles 49 to 51).
General information, not tax advice.
Common questions
Can I claim VAT on a team lunch or client dinner?
Generally no. Food and entertainment services are restricted expenses, so the VAT is booked as part of the cost. There are exceptions, for example where the cost is itself part of a taxable supply you make; ask your tax adviser for your case.
What about food a restaurant buys to sell?
Ingredients a restaurant buys to make food it sells are for its taxable sales, which is different from buying food services for staff or guests. Ask your adviser how the rule applies to your business.
Does BookMyBills know about blocked VAT?
Yes. When a bill is for a restricted expense such as entertainment or gifts, BookMyBills books the VAT to the cost instead of input VAT, and your accountant can change it before approving.