Accounting - Saudi Arabia
VAT in Saudi Arabia
Value Added Tax (VAT) is an indirect tax, menaing it is paid by another person (Business) other than the one it is intended to tax (Consumers).
VAT is a tax on consumption, that is pass-through to businesses, but surely can affect their cash-flow and adds a tax risk for penalties in case of incorrect application or non-payment.
It was effected in Saudi Arabia in 2018 and the legislation is based on the Common VAT Agreement of the States of the Gulf Cooperation Council. The Common VAT Framework is based on the European Union, Australia and New Zealand VAT legislation.
Our English and Arabic speaking Tax Team has extensive experience in:
- VAT Advisory
- VAT Implementation
- VAT Return Review
- VAT Return Preparation
- VAT Risk Assessment
- VAT Litigation Support
We are successfully advising MNCs and large Saudi Groups operating in Saudi Arabia.
VAT Requirements in Saudi Arabia
The main features of VAT in the Kingdom of Saudi Arabia are mentioned below. For a more detailed analysis you can refer to our Insights section.
Registration
SAR 375,000 of taxable supplies is the mandatory registration threshold.
SAR 187,500 of taxable supplies is the voluntary registration threshold.
Books
All companies in Saudi Arabia should have accounting books in Arabic language.
Invoices
All companies in Saudi Arabia, that are registered for Value Added Tax (VAT), should issue electronic invoices (e-invoices) for both local and cross-border transactions. The invoices should follow specific presentation rules.
VAT Rates
- Standard rate: 15% (used to be 5% until 30.06.20)
- Zero rate: 0% (for exports of goods and services and certain economy sectors)
- Exempt: Certain services are exempt from VAT.
Statutory Limitation
The statutory limit of keeping accounting books, records and other accounting documents for VAT audit purposes is set at 5 years from the end of the relevant fiscal / tax period.
Closing
Our main aim is to support the operations of our Clients with compliant and high value added services. We are operating and supporting Clients in Saudi Arabia since 2017 and we have the necessary know-how to provide that peace of mind when Saudi tax authorities (ZATCA) will come to audit.
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