Deemed supply occurs when a supplier indicates that goods or services have been supplied, even if no consideration has been received for these goods or services. In such cases, the tax is imposed on this deemed supply, even if the taxable person has not received any payment for these goods or services. However, the taxable person does not have the right to waive the state’s right to this tax.
Deemed supply tax is imposed when the taxable person has claimed input tax on these goods or services.
The following actions by the taxable person are considered deemed supplies:

  1. Disposal of goods for purposes other than business, whether with or without consideration.
  2. Changing the use of goods to make supplies that are not subject to tax.
  3. Retaining goods after business activities have ceased.
  4. Supplying goods without consideration, unless the supply is within the context of business, such as providing samples or low-value gifts.
  5. Using goods that form part of personal assets for personal use.
  6. Supplying services without consideration.

If the taxable person has deducted only part of the input tax when purchasing goods and services or when importing goods directly related to any deemed supply, the value of the deemed supply will be adjusted to reflect the relative value of the input tax deducted.
There are also supply scenarios exempted by VAT legislation, which are considered non-deemed supplies and are not subject to tax under the following conditions:

  1. If a taxable person provides gifts and samples to promote their economic activity, provided that the fair market value of each gift or sample does not exceed SAR 200 (excluding VAT) per person per calendar year. Also, intra-group supplies are ignored, as they are treated as a single entity, and thus, cannot supply to themselves. Therefore, supplies between members of the tax group fall outside the scope of VAT.
  2. Similarly, if the taxable person provides gifts to their employees, provided that the value of each gift does not exceed SAR 200 (excluding VAT) per person per calendar year, and the total value of gifts and samples for the calendar year does not exceed SAR 50,000 based on the fair market value.

Furthermore, damaged, stolen, or lost goods are exempted from VAT, as they are deemed non-supplies. However, to be exempted, they must meet the conditions set by the authority, and the authority may request a report from the police or an insurance company to prove the damage, theft, or loss.