Saudi Arabia 2018 VAT bill

Mon 29th May 2017

Saudi Arabia today published its draft VAT law. It is first of the six Gulf Arab states planning to launch VAT on 1 January 2018 to present detailed legislation.  The other states of the Gulf Cooperation Council launching a harmonized 5% VAT regime are: Bahrain; Kuwait; Qatar; Oman; and UAE.

The law is based on the recently published GCC Unified Customs Law, which provides the principles for all six states to adopt in their VAT regimes.  Topics covered by the Saudi Value Added Tax Draft Law include:

  • VAT registration requirements and processes for resident and non-resident businesses
  • VAT Groups, and related companies acting as a single taxable person
  • VAT on imports, including import VAT deferment and customs duty suspension regimes
  • Zero-rating on goods movements from other GCC states
  • The possibility of cash-based VAT reporting
  • The right for taxable persons to deduct input VAT incurred
  • Cooperation with other GCC states on VAT audits and investigations
  • VAT records
  • VAT refunds
  • Fines and penalties regime
  • Transitional arrangements
  • Import VAT union including the other GCC states

There is still much detailed regulations missing on practical issues, including: the time of supply; what goods and services are exempt or nil-rated; VAT invoice and credit rules; and VAT reporting periods and remittances.

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