Tuesday 21 November 2017
 
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Saudi Arabia to exempt many items from 5pc VAT

RIYADH, 16 days ago

Saudi government has declared that not all goods and services will be subjected to the standard 5 per cent value-added tax (VAT) rate as some of them will fall under the zero-rated, the exempt or outside the VAT scope altogether.

The General Authority of Zakat and Tax (GAZT) clarified that as per the VAT implementing regulations declared by its board, a 5 per cent VAT will be collected on all goods and services subject to the standard rate at each stage of the supply chain up to the end user.

Those in the zero-rated goods and services category include certain medications and medical equipment specified by the Ministry of Health and Saudi Food and Drug Authority, supply of gold, silver and platinum that is for investment purposes – at least 99 per cent pure - and tradeable in the international bar market.

Other zero-rated goods and services include any exports destined outside the GCC region, services supplied to non-GCC residents, international transport services of goods and people and supply of qualified international transport vehicles and related services such as supply of spare parts, maintenance, repair and modifications of transport vehicles.

As for the exempted goods and services, the list features certain financial services which include but are not limited to the issue, transfer or receipt of, or any dealing with money or any security, the provision of any credit or credit guarantee and life insurance or reinsurance of life insurance contracts. Also exempted is rental of residential real estate, which is defined as a permanent dwelling designed for human occupation.

Any activity exercised by a government body in its capacity as a public authority – such as issuance and renewal of passports and driving licences - shall not be considered to be an economic activity and as such, falls outside the VAT scope and will not be subject to VAT.

GAZT stressed that the nature of the economic activity is what ultimately determines whether or not the exchange of goods and services that occur falls under the VAT scope.

It called upon all businesses to thoroughly read and understand the implementing regulations available on the dedicated VAT website to be fully prepared for the January 1 launch.

The website also features a wide range of resources that support businesses’ VAT-readiness, including tools, information and tutorial guides, in addition to a list of Goods and services subject to the tax.-TradeArabia News Service




Tags: Saudi Arabia | tax | VAT | Medication | exempt |

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