Frequently Asked Questions

1. What is VAT? How does it work? When does it start?

The General Authority of Zakat and Tax (GAZT) has announced the introduction of a Value Added Tax (VAT) across the country, effective January 1, 2018.

 

A Value Added Tax (VAT) is a form of indirect tax on the consumption or use of goods and services applied at the point of sale and charged on applicable transactions.

 

A registered business collects VAT charged to customers on supply of goods and services and pays VAT on goods and service purchased from its suppliers. The difference between the VAT collected from customers and the VAT paid to suppliers is then remitted to the General Authority of Zakat and Tax (GAZT).

2. What are the VAT rates?

VAT will be introduced across Saudi Arabia at a standard rate of 5%. Certain supplies of goods and services will be subject to a 0% VAT charge while some are exempt.

Refer KSA VAT regulations

3. What products and services are covered under VAT?

VAT  is a general consumption tax, and will apply to the majority of transactions of goods and services, unless specifically exempt by law. SAB LLC will apply and collect VAT where applicable on its services from January 1, 2018. Rates and charges on all existing SAB LLC contracts are VAT exclusive.

4. Who needs to register for VAT?

A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold prescribed. Additional information for businesses can be found at:

5. What are the VAT responsibilities of a business from January 1, 2018?

VAT-registered businesses generally:

  • must charge VAT on taxable goods or services they supply;
  • must issue a valid VAT invoice for the supply of goods and services. To be considered as a valid VAT invoice, the document must follow a specific format as mentioned in the legislation;
  • may reclaim any VAT they’ve paid on business-related goods or services; and
  • maintain business records which will allow the government to check that they are compliant.

6. Do you have more VAT questions?

Helpful links for information on VAT:

Common VAT Agreement of the States of the Gulf Co-operation Council

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