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Saudi Arabia explains invoicing rules for GCC VAT

Saudi Arabia explains invoicing rules for GCC VAT

RIYADH: Saudi Arabia’s tax agency has released more guidance on the value-added tax, ahead of its introduction on January 1, 2018, focusing on invoicing obligations.

The General Authority of Zakat and Tax (GAZT) said two types of invoices are outlined in the VAT Implementing Regulations, which is to govern the value-added tax regimes to be implemented in all Gulf Cooperation Council states (the United Arab Emirates, also from January 1, 2018, and in Kuwait, Qatar, Bahrain, and Oman subsequently.)

The first is a simplified tax invoice for the supply of goods or services with a total value of less than SAR1,000 (USD266), which must include the date of issue; the name, address, and VAT identification number of the supplier; details of the goods or services supplied; consideration to be received for goods or services; and a clear statement of the tax payable or indication that the total payment (consideration) includes the tax in respect of the supply of goods or services. A simplified tax invoice may not be issued with respect to an internal supply or exports.

The second type of invoice is for transactions that exceed SAR1,000, which require a more detailed invoice, as outlined in Article 53 of the Implementing Regulations. This invoice, which must be in Arabic in addition to any other language, must include the date of issue of the invoice, the serial number identifying and distinguishing the tax invoice, the supplier’s VAT identification number, the customer’s VAT identification number (if the customer is responsible for the calculation of the import tax and a statement thereof), the date on which the supply was signed, the name and address of the supplier and the customer, the amount and nature of the goods supplied, the scope and nature of the services provided, the amounts subject to tax or specifically exempt, the unit price excluding tax, and any discounts or rebates if not included in the unit price, as well as the applicable VAT rate and amount due in Saudi riyals (the local currency).

According to the Implementing Regulations, every taxable entity is required to issue tax invoices when supplying goods or services subject to VAT, or any payments made in respect of the supply of goods or services. This helps businesses file their tax returns on time, and go through the required process for tax refunds on inputs.

GAZT confirmed that in the event of discounted prices on goods or services, VAT should be applied to the final discounted price, rather than the original amount. GAZT called on businesses to provide clear invoices that specify goods or services that are not subject to standard five percent VAT due to being exempt from VAT or subject to a zero rate of tax.

Businesses whose annual revenues exceed SAR1m must register for VAT before December 20, 2017, to avoid financial penalties and the suspension of government services.