KSA VAT FAQs

VAT GENERAL QUERIES

What is VAT?

Value Added Tax (VAT) is a popular form of indirect tax levied in more than 160 countries worldwide. The seller charges it from their customers to sell goods and services.

Is the selling of 1,000,000 SR owned private property chargeable under VAT?

Under VAT Implementing Regulations, the sale of a personal residence is exempt from taxation. However, the sale of a commercial property will be chargeable to tax.

Are government supplies subject to VAT?

Yes, government supplies are subject to VAT and the responsible person making supplies is required to collect VAT.

How much VAT is charged on domestic airline tickets?

Standard VAT rate is applicable upon domestic air tickets, if not part of an international flight.

Is VAT applicable on all goods and services?

Almost all goods and services are subject to VAT in Saudi Arabia, except for certain notified financial services and sale of residential property, which have been construed as to exempt services.

Do advance payments attract VAT?

The taxpayer must pay VAT if the advances are received against a taxable supply of goods or services. The supplier shall raise an invoice for the value of the advance payments along with VAT.

Is VAT applicable on products sold/purchased in auctions?

There is no exemption available for such sales/purchases. However, the applicability of VAT depends upon the seller. If a seller enters into such a transaction as part of his business activity, VAT will apply. In the case of an intermediary, VAT would apply to the commission charged.

How do I know if I am liable to register on ZATCA for VAT?

Every taxable person whose value of taxable supplies exceeds the threshold of SAR 375,000 are mandatorily required to register on ZATCA (earlier known as GAZT) for VAT. If such supplies exceed SAR 187,500, then they can register voluntarily.

What is the anticipated impact of VAT on prices?

The impact of the VAT will be borne by end consumers. The suppliers must collect VAT on output supplies and deposit with ZATCA after deducting VAT paid on input supplies.

Does registration under VAT lead to loss of competitive advantage compared to unregistered entities?

No, registration under VAT does not lead to loss of any kind of competitive advantage. Unregistered suppliers cannot claim a deduction for VAT on input supplies, which increases their cost and makes them at par with registered suppliers.

Is VAT applicable on imported goods?

Yes, imports are also subject to VAT.

How is VAT calculated on the issuance of recharge cards or credits?

Recharge cards are electronic equivalents of cash value. Thus, recharging cards do not constitute supply under VAT, and therefore, VAT is not chargeable.

What is the taxability of real estate supplies?

Residential property given on lease, license or rent falls under zero-rated supplies and does not attract any VAT. However, properties used for commercial purposes, such as offices, hotel accommodations, services, etc., are taxable at the standard VAT rate of 15%.

Is VAT leviable on renting?

Renting any property, except residential property, is chargeable to VAT.

How does ZATCA ensure that all the taxable persons whose value of supplies exceed 375,000 SAR have registered on ZATCA?

ZATCA conducts extensive audits and tax compliance procedures to reduce the number of non-compliant enterprises. Also, ZATCA conducts nationwide campaigns to urge unregistered enterprises to register and imposes fines for non-compliance.

What is the difference between IFRS and VAT?

International Financial Reporting Standards (IFRS) are global accounting standards that an entity needs to comply with while recording its financial transaction. Value Added Tax (VAT) is a kind of indirect tax that an entity needs to collect from their customers to sell goods and services. Thus, there is no common link between the two and both are separate systems.

What is the role of ZATCA in relation to VAT?

ZATCA (earlier known as GAZT) is the government body in Saudi Arabia responsible for assessing and collecting Zakat and taxes. It oversees:

• Registration and deregistration of taxpayers
• Management of tax returns and tax refunds
• Conducting audits and inspections
• Imposing fines and penalties on non-compliers

Where can I find more information on VAT?

The ZATCA website contains all the information about VAT. In addition to this, taxpayers can also contact service agents for more information.

VAT REGISTRATION

Why can’t I log in?

For logging into the official website of Zakat, Tax and Customs Authority (ZATCA), a pre-authorised user name is required. If the user was already registered on the old website of GAZT, the same username could be used for registration on the new website.

I have registered on the website but cannot complete the registration immediately. Can I do it later?

Yes, if the user cannot complete the registration process immediately, they can save the draft to finish it later.

How can I find more information about VAT?

The user can find more information about VAT on ZATCA’s official website. The user can contact a VAT customer service agent through social media channels for further inquiries.

If any conflict arises between the Provisions of VAT Law and Regulations and contents on ZATCA’s website, VAT Law and Regulations will prevail.

VAT RETURN FILING

How can I file a tax return?

For filing the VAT return, the user needs to create an account and log in to ZATCA’s website. The user can then fill the return and send the same to receive back the invoice.

How can I amend the filed tax return?

Users can use deductions or add-on-notices to amend any VAT declared wrongly in previous invoices.       

VAT PAYMENT/REFUND

Is it mandatory to include Company’s address (location) in the tax invoice?

Yes, the tax invoice should mandatorily include the name and address of the supplier and the customer. However, in the case of a simplified e-invoice (B2C transactions), the buyer’s details are not required to be included in the e-invoice.

What are the requirements of a manual invoice?

Tax invoices should include all the requirements specified in Article 53 of the VAT Implementing Regulations.

What are SADAD procedures when filing a VAT tax return?

SADAD, basically, refers to the tax invoice generated for tax payment by ZATCA after the taxpayer filed the return. SADAD includes an invoice number and the amount of tax due, corresponding to which the taxpayer needs to make the payment to ZATCA’s bank account through an online payment gateway or ATM. Post payment, the taxpayer will receive a receipt of the amount along with a Tax Return Reference Number.

What is the maximum attachment limit in a tax return?

The maximum limit of attachment in the tax return is 1 MB.

ZATCA PORTAL

What are tax committees? What are their responsibilities?

Taxpayers have the option to escalate their objection to the tax committee for resolution of objection through the General Secretariat of Tax Committees for reconsideration. The main responsibility of the tax committee is the resolution of disputes.

How much time does it take to process an objection?

An objection will be resolved within 90 days from its submitted date.