The General authority for Zakat and taxes (GAZT), the regulatory body for taxation in Kingdom of Saudi Arabia (KSA) have recently updated some notable points on their website about Value Added Tax (VAT). It illuminates the stakeholders about various key facts about implementation of VAT.
Key Facts
- Website clearly states that the legislation for VAT in KSA is developed and shall be implemented with effect from 1st January 2018 as planned.
- The standard rate of VAT is 5% on most of the goods but certain essential items will be charged at zero rate or exempted from VAT.
- The authorities shall allow businesses to register for VAT in the second half of the year 2017. The businesses having annual turnover of SAR 375,000 will mandatorily be required to register for VAT. The businesses having annual turnover of SAR 187,500 shall have the option to register voluntarily for VAT.
- It clarifies that businesses will have to file regular VAT returns for VAT charged, VAT collected and the differences between the two. However, the frequency for filing returns have not yet been clarified.
- Book keeping requirements are mentioned but clarifications and technicalities are awaited regarding details of documents and financial statements to be maintained.
Bottom-line
The recently published FAQ’s signifies the strong intentions of KSA to achieve its target date of implementation of VAT in KSA from 1st January 2018. The GAZT is already working on the finalization of VAT policies, and practical issues related to governmental coordination and dealing with increased work load post implementation of VAT. The GAZT is also working on developing its own capabilities and conducting VAT awareness programs for stakeholders.
