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Saudi VAT

 

 

VAT in Saudi Arabia

Software for VAT invoicing, accounting and compliance

جعل الامتثال الضريبي بسيطة


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Saudi VAT explained

The Kingdom of Saudi Arabia (KSA) has introduced a VAT of 5%. VAT in Saudi Arabia is introduced to enhance government revenue as excessive reliance on oil revenue could challenge the fiscal stability of the nation given the fall in oil prices. VAT, which stands for Value Added Tax is an indirect tax and it is applicable on most of the goods and service sold in the country. The tax was effective from 1st January 2018.

While the Saudi government has done a great job in detailing specs of the new tax regime, there are still many aspects related VAT invoicing, accounting and return filing that needs to be discussed more often to help small businesses comfortable with VAT in Saudi and to encourage compliance.

Everything you need to know about Saudi VAT. How to register for VAT to how to file VAT returns, we have created an all-in-one guide. Listed below are frequently asked questions and responses to the queries about VAT Saudi Arabia.

What is Saudi VAT registration?

VAT registration is the process to enroll a taxable entity for VAT. Upon successful registration a unique VAT account number is provided to the entity.

Who Needs to register for VAT?

Any business that does a revenue of more than one million SAR (1 MM SAR) is expected to be VAT ready 1st January 2018 (it’s mandatory).

Any business that does a revenue of more than three hundred and seventy-five thousand SAR (375 K SAR) is expected to be VAT ready by 1st January 2019 (it’s mandatory). However, businesses with such turnover can still volunteer to be part of the VAT regime. Please note, it is optional and not mandatory until 31st December 2018.

Also, any business that does a revenue of more than one hundred and eighty-seven thousand and five hundred SAR (187.5 K SAR) can also volunteer to enroll into the VAT regime, it’s purely optional and it’s once choice.

Any business that does a turnover of less that 187.5 K SAR is completely exempted from Saudi VAT regime.

How to register for VAT?

To register for VAT in Saudi Arabia, businesses must first be registered at GAZT for Zakat and Income Tax. Please note, the General Authority of Zakat and Tax (GAZT) is the apex body that would monitor enforcement and VAT compliance.

How to create a VAT Saudi Arabia compliant invoice?

As noted in article 53, Clause No.5 of Implementing Regulations under the Saudi VAT Law: “A Tax Invoice must include the details in Arabic, in addition to any other language also shown on the Tax Invoice as a translation.” We have created a Arabic-English VAT invoice template, which issues VAT invoices in bilingual invoice, check it out.

How to calculate VAT liability?

Saudi VAT liability calculation is quite simple, it’s just the difference between VAT collected on all invoices and VAT paid on all expenses.

What is the frequency of filing VAT returns?

Filing frequency depends on your turnover. If turnover is less than 40MM SAR you can file returns on quarterly basis and if it more that 40 MM SAR, returns must be filed on monthly basis.

How to file Saudi VAT returns?

Saudi VAT return filing is very simple. Just login to your GAZT e-portal and fill out the following details.
Sales Related:
-Standard rated domestic sales
-Private Healthcare / Private Education / First house sales to citizens
-Zero rated domestic sales
-Zero rated exports
-Exempt sales
Purchase Related:
-Standard rated domestic purchases
-Imports subject to VAT paid at customs
-Imports subject to VAT accounted for through the reverse charge mechanism
-Zero rated purchases
-Exempt purchases
-Corrections from previous period (up to 5,000 SAR)

Conclusion:

The bold move of the government is well planned and structured. Each and every information related to Saudi VAT is available on the GAZT portal and explained in a very simple way. We feel the process right from VAT registration to return filing is easy and would drive business to comply and contribute to nation’s prosperity.