ZATCA has issued guidance clarifying when electronic marketplaces are treated as deemed suppliers under Article 47 of the VAT Regulations.

Why This Matters

The guidance explains when VAT responsibility shifts from sellers to electronic marketplaces. This means some platforms may have to account for VAT themselves instead of leaving it to individual suppliers. For affected business models, this affects where VAT is reported and makes it important to review how marketplace arrangements are structured and operated.

Key Highlights

• Deemed Supplier Status: Applies when a marketplace facilitates:
  • Electronic services supplied by non-residents.
  • Goods/services supplied by resident non-registered suppliers (effective from 2026).
• Exceptions: Marketplace is not deemed a supplier if the underlying supplier is clearly identified, contracts are direct, and the marketplace does not control terms, pricing, payment, or complaints.
• Not Facilitating a Supply: Activities limited to payment processing, advertising, or redirecting customers do not create deemed supplier status.
• Obligations: Deemed suppliers must issue VAT invoices, file VAT returns, pay VAT, maintain records, and apply VAT to cancellations and adjustments.
• Sector Impact: Food delivery and short-term accommodation platforms are commonly captured due to operational control.

Point of View

The guidance explains how ZATCA will apply Article 47 in practice and should not be seen as a minor technical update. Whether a marketplace is treated as a deemed supplier depends on how much control it has over the transaction, including pricing, contract terms, payments, and customer interactions. Where the platform plays an active role, VAT responsibility is more likely to rest with the marketplace rather than individual suppliers.

Although the rules include exceptions where the supplier is clearly identified and contracts are made directly, these conditions must all be met and depend on how the platform actually operates. Activities such as payment processing, advertising, or simply redirecting customers are generally outside the scope, but many platforms do more than this in practice.

Food delivery and short-term accommodation platforms show how day-to-day operational involvement can trigger deemed supplier treatment, and similar issues may arise for other marketplace models. As a result, VAT compliance for marketplaces depends not only on invoicing and reporting, but also on how business and contractual arrangements are structured.

Recommended Actions

• Assess whether the marketplace exercises control over pricing, contractual terms, payments, or customer interactions that could trigger deemed supplier treatment.
• Review supplier and customer contracts to ensure they reflect the platform’s actual role in the transaction.
• Identify where VAT responsibility may shift to the marketplace based on how the platform operates in practice.
• Update VAT invoicing, reporting processes, and systems where the marketplace is required to account for VAT as the supplier.