RIYADH: Saudi Arabia’s General Authority of Zakat and Tax (GAZT) has launched a public consultation on the draft Implementing Regulations for the proposed value-added tax (VAT) in the kingdom.
The public consultation is to invite people to share their views on the specific KSA VAT Implementing Regulations framework, GAZT said. The deadline for feedback submission on GATZ website is August 19.
Some takeaways from the draft VAT regulations, according to Al Tamimi & Company, a leading law firm, are; VAT will be implemented in Saudi Arabia effective January 1, 2018, Businesses that meet the registration requirements should register by September 30, 2017. In this regard, GAZT has already started registering large businesses automatically based on existing information on taxpayers held by it. Businesses that are registered in this way are expected to receive a notification via email and their VAT number by September, Small businesses with turnover of less than SR1 million will be given the opportunity to delay registration until January 1, 2019. Group registrations will also be available, VAT returns will be required to be submitted on a monthly or quarterly basis depending on the turnover with the returns and payment due within a month after the end of the period, Supplies of residential real estate will be exempt from VAT and supplies of commercial property will be subject to VAT, Fee based financial services will be subject to VAT whereas margin based products will be exempt. All insurance services will be subject to VAT except life insurance which will be exempt, Healthcare and education services will be subject to VAT unless these services are provided by the government and The import of services will be subject to the reverse charge mechanism.
“As the VAT registration process is required to be completed by the end of September 2017 and VAT will be effective from January 1, 2018, it is important for companies to undertake a VAT impact assessment to understand the impact of VAT on their businesses and to comply with VAT obligations,” said Al Tamimi & Company.