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Saudi Arabia will allow businesses to maintain English-language records in computerized accounting systems for managing value-added tax, easing its insistence that all data must be entered in Arabic.
The relaxation is one of several changes included in a revised version of the VAT implementing regulations released Jan. 21 after finalization Jan. 12 by the kingdom’s General Authority of Zakat and Tax (GAZT). Earlier, Saudi Arabia revised its tax policy on private healthcare and education, zero-rating both sectors after the UAE did the same.
The UAE and Saudi Arabia introduced VAT on Jan. 1, to be followed within a year by the four remaining nations of the Gulf Cooperation Council, according to a treaty signed in 2016. The Gulf states are seeking to diversify their budget away from oil and gas as crude prices struggle to recover their 2014 high of more than $100 a barrel.
Although records and tax invoices must also be kept and issued in Arabic, “whenever and to the extent practicably possible data shall be entered into the computer system in the Arabic language,” according to the revised wording of Article 66 of the regulations, easing the need for businesses to purchase Arabic-language accounting systems for internal use.
“This amendment marks a small but important relaxation to the prior requirement for entry in Arabic in all cases,” Deloitte said in a Jan. 24 memo to clients, given that many international enterprise resource planning systems are designed for English input only. “The requirement for tax invoices and all records to be issued in Arabic remains as previously stated,” Deloitte said.
Other revisions communicated previously, but now formalized in the regulations, are the requirement for a business to display its VAT registration certificate (Art. 8); and the obligation to issue a simplified VAT invoice for all transactions not specifically covered by other requirements (Art. 53).
Jeremy Cape, a tax and public policy partner at Squire Patton Boggs law firm in London, said by email Jan. 29 that it is to be expected that in the first few months, GAZT and the Federal Tax Authority in the UAE will make minor changes to the way in which VAT is administered. “Some of these are aimed at simplifying the operation of VAT, others will aim at ensuring full compliance. We’ve also already seen more fundamental changes in Saudi Arabia to the VAT regime, notably the move to zero rating in the health and education sector, and the question remains whether we will see more,” Cape said.
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