Mitigating the Developmental and Economic Impact of COVID-19 with new VAT Incentives in Saudi Arabia

In order to mitigate the developmental and economic impact of the Coronavirus on the Saudi Arabian private sector, the General Authority of Zakat and Tax (GAZT) recently launched a number of incentives that will provide support for taxpayers and stimulate the economy.  These General Authority of Zakat and Tax incentives in Saudi Arabia fall in line with:

• The International Monetary Fund recommendations for global tax authorities
• Ministry of Finance resolution announcements
• Royal Decree No. 45089 dated March 18^th, 2020

The scope of these incentives applies to companies doing Business in Saudi Arabia and that failed to meet their registration obligations and enables them to register for VAT.  Here is a quick recap of the provided incentives related to the VAT as it gives the taxpayers a chance to get relief from penalties.

As the opportunity is time bound till end of June, experts recommend that the companies and taxpayers look over the past tax returns and disclose all of the errors or omissions under this window of opportunity. The following is a summary of these incentives as they relate to the VAT:

• Eligibility and timeframe – benefits are extended to all registered taxpayers as well as those that are required to register according to KSA VAT legislations (includes non-residents who are required to pay VAT in Saudi Arabia. In addition to this, any VAT registration as well as return amendments made between March 18^th and June 30^th, 2020 will be eligible for benefits.

• Late registrations – for resident and non-resident entries that should have been registered prior to the original date of March 18th, NO penalties will be imposed from 18^th March to 20^th June 2020 and this holds valid for non-resident taxpayers.

• Returns and voluntary disclosures – VAT returns that were due prior to March 18^th can be filed up until June 30^th without incurring penalties. Taxpayers are allowed to make amendments to previously submitted returns up until June 30^th without incurring penalties.  Furthermore, that can apply for an installment plan and make payments during the incentive period.  Previously audited GAZT returns can also be amended while those returns that are undergoing an audit can be amended by contacting the GAZT directly.

It should also be noted that there are limitations that will apply where these incentives are concerned.  For example, any additional taxes or penalties that were imposed prior to the date of the initiative will not be cancelled.  Additionally, any requests for tax refunds due to VAT returns amendments will no longer be accepted.  They will be processed as per the current KSA VAT Legislation. For additional information or to learn if these new VAT incentives apply to you, contact a VAT consultant in Saudi Arabia.

Thus, to claim benefits under this new scheme, all previous liabilities need to be cleared before 1^st July 2020. Thus, it is time to review the previous and current VAT position to keep your tax returns in order and smoothen the process.

If your company is looking for professional assistance with VAT and tax filing procedures, contact Intuit Management Consultancy (IMC Group). With years in the

Industry, we offer business set up solutions, tax advisory, international tax structuring, bookkeeping and VAT. Call us today and let us help you.