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Saudi Arabia has set a Dec. 20 deadline for mandatory VAT registration, ending weeks of speculation.
The Saudi VAT law, gazetted July 28, referred to a deadline of “30 days” from its publication without a specific date, sparking speculation from professional advisers and media that businesses liable to pay VAT had only until Aug. 26 or 27 to register.
“The draft VAT law, which was issued on 29 May, did not mention a specific deadline for VAT registration,” Shiraz Khan, team leader of the Middle East tax practice at the Al Tamimi and Co. law firm in Dubai, told Bloomberg BNA by email Aug. 16. This surprised practitioners “because the online VAT registration portal was not expected to open until September and so it was not even possible for all taxpayers to register in practice within this timeframe, except certain large taxpayers that were automatically being registered” by the General Authority of Zakat and Tax (GAZT).
The online registration portal still wasn’t operational two weeks after the law’s publication, and public consultation on the draft regulations doesn’t end until Aug. 19. But the picture cleared when the official tax authority website published a clear date.
“All companies, businesses or entities which make an annual taxable supply of goods and services in excess of SAR 375,000 are legally required to register for VAT by 20th December 2017,” the government website said.
“It is now understood that the online VAT registration will be open from 28 August and the new website launched by GAZT has clarified that taxpayers will have until 20 December 2017 to register as was originally expected based on the draft executive regulations,” Khan said.
Taxable persons whose annual taxable supplies exceed the mandatory registration threshold but don’t exceed 1,000,000 riyals ($266,638) will be exempted from the requirement to register for another year, the website said, while those supplying in excess of 187,500 riyals can register voluntarily. “Voluntary Registration provides significant benefits for the companies since it allows the deduction of input tax,” the website said.
Nonresidents obliged to pay VAT for their economic activities in the kingdom must also register, but they must have a “Tax Representative established in Saudi Arabia and who is approved” by GAZT.
Some large companies already registered with GAZT will be automatically registered for VAT.
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