TOGC & Cessation in Saudi VAT: Understanding The New Obligations

Under the 2025 VAT amendments, Saudi Arabia has elevated the importance of Transfer of Going Concern (TOGC) rules and cessation requirements for businesses changing ownership or closing operations.

Amended TOGC & Cessation Provisions

• Supplier and recipient must notify ZATCA no later than the end of the next tax period.

• Cessation triggers retention of records beyond business closure.

• Conditions under which TOGC is VAT-exempt have become stricter.
• Transfers that don’t meet TOGC criteria may attract full VAT as a normal supply.

Business Impacts & Risks

• Mergers, acquisitions, and corporate restructuring must evaluate VAT consequences.
• Caution needed when winding up operations — closure may not erase obligations.
• Buyers must assess VAT liability risks if the transfer doesn’t qualify as TOGC.

Conclusion

Saudi’s VAT reforms make exit & restructuring tricky. TOGC rules tightened, record retention extended — get the transfer right or face big VAT bills.

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