Saudi VAT enforcement: 55 days to go as businesses urged to follow new rules

Updated 05 November 2017
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Saudi VAT enforcement: 55 days to go as businesses urged to follow new rules

JEDDAH: All businesses have been advised to make sure they understand the new rules on value-added tax (VAT) and be ready for their application on Jan. 1, 2018, which is in 55 days.
The General Authority of Zakat & Tax (GAZT) has urged businesses to read the regulations which can be found on the tax’s official website.
According to the rules approved by GAZT’s board, a 5 percent VAT will be imposed on most goods and services at each stage of the supply chain from production and distribution to the final sale.
The regulations also defined the goods and services that will be exempt, zero-rated and out of scope.
Activities subjected to a zero percent VAT include the supply of medicines and medical equipment specified by the Ministry of Health and the Saudi Food and Drug Authority, the supply of gold and silver for investment purposes provided they are at least 99 percent pure and tradable in the Global Bullion Market, and the export of goods to outside the Gulf Cooperation Council (GCC) region.
Goods and services exempt from VAT, according to the new rules, include financial services such as dealing in money or securities, providing credit or credit guarantee for customers, and life insurance and reinsurance contracts. The renting of residential property is also exempt from VAT.
Services provided by government agencies as public authorities, such as the issuance and renewal of passports and driving licenses, will be out of the tax’s scope.
The VAT official website (vat.gov.sa) provides tools and information that support businesses and help them prepare for the application of VAT, in addition to visual aids, registration and VAT application information, and the list of goods and services subject to VAT.
The move is in line with an International Monetary Fund (IMF) recommendation for Gulf states to impose revenue-raising measures including excise and value-added taxes to help their adjustment to lower crude oil prices, which have slowed regional growth.
It is estimated that the VAT’s imposition will raise between $7 billion and $21 billion annually — or between 0.5 percent and 1.5 percent of regional GDP (gross domestic product).
Speculations surfaced in social media about a delay in the implementation process, but Rashid Al-Fowzan head of CNBC-Arabia TV channel, has made it clear that the VAT implementation will go as planned on Jan. 1, 2018.
Abdulrahman Al-Hussain, spokesperson of the Ministry of Commerce and Investment, has warned businesses against implementing the tax before the scheduled date. He threatened them with serious consequences following concerns raised by a section of the public.


King Salman to inaugurate key mining, industrial projects

Updated 6 min 37 sec ago
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King Salman to inaugurate key mining, industrial projects

  • The king will visit Waad Al-Shamal City for Mining Industries in the northern borders to inaugurate a number of mining and industrial projects
  • The Saudi Cabinet noted the visit by King Salman to Qassim and Hail, attending citizens’ celebrations as well as his inauguration of a number of development projects

JEDDAH: King Salman will visit the northern regions of the Kingdom next week to inaugurate a number of development projects.
The king will also visit Waad Al-Shamal City for Mining Industries in the northern borders to inaugurate a number of mining and industrial projects, the Royal Court said in a statement on Tuesday.
Also on Tuesday, Saudi Shoura Council Speaker Sheikh Abdullah Al Al-Asheikh announced that the king will inaugurate the activities of the third year of the seventh session of the Shoura Council next Monday. The king will deliver a speech on Saudi Arabia’s internal and external policy.
The Saudi Cabinet on Tuesday also noted the visit by King Salman to the two regions of Qassim and Hail, attending citizens’ celebrations as well as his inauguration and laying the cornerstone of a number of development projects.
This reflects the king’s directives to provide services for all citizens and regions in the Kingdom for the achievement of further growth and development.
The Cabinet also commended the king’s directive to release prisoners and the insolvent in the regions of Qassim and Hail and pay their debts, considering it an extension of his care for insolvent and limited-income citizens.
The Cabinet reviewed the Kingdom’s support for the Palestinian cause, pointing to the Saudi Fund for Development (SFD)’s transfer of the Kingdom’s financial contribution to support the Palestinian Authority’s budget for August, September and October 2018, including an additional contribution totaling $60 million.
The Cabinet reiterated Saudi Arabia’s strong condemnation and denunciation of the bombing that took place in Mosul, northern Iraq; the suicide attacks in the Iraqi capital of Mogadishu and the Afghani capital of Kabul; and the attack in the city of Melbourne, Australia, confirming the Kingdom’s rejection of violence, terrorism and extremism, offering condolences to the families of the dead and wishing the injured a speedy recovery.
The Cabinet reviewed a number of scientific and cultural activities, stressing that the patronage of King Salman of the honoring ceremony of winners of the eighth King Khalid Award is considered an expression of his support for the prize to achieve its humanitarian, social and developmental goals.