VAT IMPLEMENTATION
Value Added Tax (or VAT)
is an indirect tax imposed on all goods and services that are bought and sold
by businesses, with a few exceptions. VAT is applied in more than 160 countries
around the world as a reliable source of revenue for state budgets.
The consumer pays the VAT
cost on purchased goods and services. Businesses pay the government the VAT
collected from their customers’ purchases and refund the VAT they paid to their
suppliers.
In June 2016, the GCC
countries agreed to impose VAT across the GCC region. In February 2017 (Jumada
Al-Awwal 1438), Saudi Arabia ratified the GCC VAT framework and committed to
impose VAT with effect from January 1, 2018 (Rabi Al-Thani 14, 1439). VAT will
be introduced at a standard rate of 5%.
The General Authority of
Zakat and Tax (GAZT) is responsible for managing the implementation,
administration and enforcement of VAT in Saudi Arabia. It does so in close
coordination with other relevant entities.
NEW VAT ANNOUNCEMENT
General Authority of Zakat
and Tax (“GAZT”) has announced an increase on VAT rate to 15% instead of 5% on
May 11, 2020.
Subsequently, the GAZT has
published a VAT transitional guideline governing supplies taking place around,
or spanning, the date of rate change of July 1, 2020.
We, Ebda'at Hijria Establishment for Ecommerce Businesses are taking the necessary actions regarding our systems and
necessary documents to comply with the new VAT announcement.