Compliance
How Saudi Arabia’s New VAT Refund Rule Helps Charities & Public Benefit Entities
Saudi Arabia’s recent resolution No. 26097 introduces VAT refunds for donors and public benefit contributors—extending financial relief to non‐profits and philanthropic entities.
By NomadicTax Research Team • 5-8 min read • September 10, 2026
## What’s the New Rule? Resolution No. 26097 Explained
In **late August 2026**, Zakat, Tax and Customs Authority (ZATCA) issued **Resolution No. 26097**, which introduces **VAT refund regulations for public benefit contributors**—organizations or donors that contribute to causes of public interest. The regulation formalizes eligibility for VAT refunds for entities that qualify as **public benefit contributors under Saudi law**.([zatca.gov.sa](https://zatca.gov.sa/en/RulesRegulations/Taxes/Pages/VAT-Refund-for-Donors-Regulations.aspx?utm_source=openai))
## Who Can Claim Refunds and How It Works
- **Eligible Entities**: Non-profits, charities, or public benefit organizations/donors officially recognized as such under relevant Saudi regulation.
- **Refundable VAT**: Input VAT incurred on purchases made in connection with public benefit activities.
- **Process**: Submit documentation proving status as public benefit contributor, along with valid VAT invoices and supporting records. Follow ZATCA’s VAT-refund procedures.
## Implications for Public Benefit Organizations
- **Lower cost burden**: Public benefit entities can recover VAT on purchases—reducing operational costs of charitable programs.
- **Encouragement for giving**: Donors may be more inclined to fund public benefit projects, knowing they can recoup VAT.
- **Compliance pressure**: Entities must keep stringent records, invoices must meet VAT law requirements.
## Practical Advice for Implementation
1. **Verify legal recognition**: Only entities formally recognized as public benefit contributors under Saudi regulations qualify. If unsure, seek ZATCA or legal confirmation.
2. **Invoice hygiene**: VAT invoices must be fully compliant—supplier details, VAT registration numbers, description of goods/services, separate VAT amounts.
3. **Allocate purchases properly**: Only purchases directly related to public benefit activity should be claimed. Overhead or non-qualifying goods/services may be excluded.
4. **Timely refund claims**: Be aware of deadlines and procedure requirements under ZATCA for submitting refund requests.
## Example Case
A Saudi charity running vaccination programs purchases medical supplies and vehicles. Under Resolution No. 26097, the charity can reclaim input VAT paid on the supplies if they are for the vaccination program and meets all invoice/documentation standards. Similarly, donors providing goods or services to the charity may also be able to claim refunds, helping reduce donation costs.
## Conclusion
Resolution No. 26097 is a meaningful step toward enabling public benefit entities in Saudi Arabia to manage resources more efficiently. By allowing VAT refunds for input costs, the Kingdom facilitates cost-effective delivery of social programs, encourages charitable activities, and aligns with broader goals of financial inclusion and economic reform. For non-profits, this change is not just symbolic—it’s financially significant. Businesses engaging with public benefit sectors should also understand these rules to properly assist or partner in projects.