The Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf, which was signed by the six member states of the Gulf Cooperation Council (GCC), requires signatories to enact domestic legislation introducing a 5% Value Added Tax (VAT) between January 1, 2018 and January 1, 2019.
Saudi Arabia and the United Arab Emirates will be the first GCC member states to introduce VAT, as of January 1, 2018. The remaining member states -- Kuwait, Qatar, Bahrain, and Oman -- are committed to introducing VAT in the course of 2018.
As part of this process, the Saudi Arabian General Authority for Zakat and Tax (GAZT) has opened a VAT registration portal. Some large companies, such as those already registered for other Saudi Arabian tax purposes, will be automatically registered for VAT by GAZT. However, taxpayers who are not automatically registered can now register for Saudi Arabian VAT, through the GAZT website, by clicking on the ‘log in’ icon.
Taxpayers that make, or intend to make, annual taxable supplies of goods and services in Saudi Arabia in excess of SAR375,000 are generally required to register for VAT by December 20, 2017. As of January 1, 2018, they must charge VAT on supplies and issue VAT invoices.
Taxpayers whose annual taxable turnover is, or is expected to be, between SAR375,000 and SAR1 million have until December 20, 2018 to register.
Taxpayers may voluntarily register for VAT if their annual taxable sales exceed, or are expected to exceed, SAR187,500.
Nonresidents who carry on economic activities, but have no fixed place of business in Saudi Arabia, are required to register if they are obligated to pay VAT in Saudi Arabia. The registration thresholds do not apply to them. They are not required to register, however, if the recipient accounts for the VAT under the reverse charge mechanism.
GAZT has issued a list of frequently asked questions covering a range of VAT related matters.
By Joanna Norland, Technical Tax Editor and Lee Hadnum, Freelance Editor, Bloomberg BNA
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