Zero-rated supplies
In one sentenceSupplies subject to VAT at 0%, so no VAT is collected from the customer, while the business keeps the right to deduct the related input VAT.
Simply put
The key difference is that a zero-rated supply is legally taxable but at a zero rate, so the business can recover the VAT it paid on purchases for this activity.
One of the best-known examples is exporting goods outside the Kingdom, provided you keep proof that they left.
Worked example
A dates factory exported a shipment outside the Kingdom worth 100,000 SAR, and paid VAT of 9,000 SAR on its production supplies.
Output VAT on the export (0%)0 SAR
Related input VAT9,000 SAR
Net0 − 9,000
Refundable credit balance9,000 SAR
Formula: Net = output VAT (zero) − input VAT
Don't confuse it with
Exempt suppliesExempt supplies are outside VAT, so the related input VAT cannot be deducted; zero-rated supplies keep the right to deduct.