VAT Records and Books of Accounts in Saudi Arabia

The taxable persons in the KSA region should maintain certain records related to VAT compliance, such as relevant books and documents up to the stipulated time in law. These records assist in the documentation of calculation and reporting of VAT for audit purposes.

Documents to be maintained under Saudi Arabia VAT

As per legal requirements specified in the unified VAT agreement, the person must retain tax invoices, books, records, and accounting documents for the minimum period mentioned in the law. The major motive behind this record-keeping requirement is that the documents consist of the particulars of supplies made and the tax charged on such supplies and help record the transactions in both VAT returns and accounting records.

Here is the list of documents:

1. All tax invoices issued and received
2. Books and accounting documents
3. Contracts or agreements for large sales and purchases, or relevant correspondence detailing particulars of supplies
4. Bank statements and other financial records
5. Import, export, and shipment documents
6. Other records relating to VAT calculation and preparation of VAT returns

VAT records format and storage

The records should mandatorily be kept in KSA either in written or electronic form. The records shall be kept in the Arabic language.

Where should the records be kept?

 In cases where the taxpayer chooses to store records electronically, the computer system or the physical server must be kept in KSA only. If the central server is not in KSA, a computer terminal with data and entries regarding the VAT accounting in KSA should be accessible. The taxpayer should always furnish the electronic or physical records to the taxpayer authority whenever requested on examination.

What is the retention period for VAT record keeping?

Records must be maintained for at least six years in all standard cases. All moveable and intangible capital assets records should be kept for at least 11 years. In cases where the life of a capital asset is less than six years, then the minimum period to retain records is the useful life of the asset plus a further five years. However, all tax invoices, books, records, and documents relating to the real estate industry should be retained for a minimum of 15 years.

VAT records to be maintained in special cases

Non-resident taxable persons

Suppose a non-resident person has a tax representative but doesn’t own any establishment within the KSA. In that case, the tax representative must maintain invoices, books, records, and accounting documents of the non-resident person.

If the non-resident doesn’t have any tax representative, then there is a need to appoint a third party to comply with the provisions of VAT regarding record and storage requirements.

The physical copies or electronic files of the record should be furnished by the appointed third party or tax representative to authority employees whenever any examination takes place.

Cash accounting scheme

The taxable persons currently using the cash accounting scheme should necessarily maintain records related to their annual turnover. This will work as necessary proof to authorities to showcase the taxpayer’s eligibility for a cash accounting scheme.

Suppliers of eligible used goods

Suppose any supplier has opted for the profit margin method to calculate tax on any supply of eligible goods. In that case, it must preserve the records for all such eligible goods purchased and supplied by any taxable person.

Requirements for additional records

In cases of registration, examination, and assessment procedures, the authority can sometimes call for additional records from taxpayers. However, the authorities should have an underlying motive and justifiable reasoning for calling such additional records from taxpayers in such a case. The authorities shall allow the taxable persons to submit the additional records within 20 days.

Penalty for non-maintenance of VAT records

If the taxpayer fails to maintain records as per the rules and regulations, he might be fined up to SAR 50,000.