No VAT on lease, mortgage deals signed before January 1 in Saudi Arabia

No VAT on mortgage deals signed before start of the new year. (Reuters)
Updated 04 January 2018
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No VAT on lease, mortgage deals signed before January 1 in Saudi Arabia

RIYADH: The General Authority for Zakat and Income Tax (GAZT) announced that all finance lease contracts or lease contracts expired by acquisition and concluded before Jan. 1, 2018, the date the value-added tax (VAT) was implemented on assets including cars or real estate, are exempted from VAT.
GAZT said that they are considered non-continuous supplies and are excluded from exceptions related to supplies of a consecutive nature. VAT will therefore not be collected on the installments due from these contracts Jan. 1, 2018.
The authority explained that all finance lease contracts or lease contracts expired by acquisition and concluded after Jan. 1, 2018 will be subject to the 5 percent VAT.
According to the provisions of the unified agreement for VAT, the tax law and its executive regulations, the tax will be collected on the value of the underlying asset, and the profits or benefits related to the contract will not be included because it is exempt from tax.
The tax on the total value of the goods supplied will be payable on the date of the supply of the underlying asset, the date of issue of the tax invoice, or on the date of delivery of the partial or full payment and within the amount received, whichever is earlier, provided that the date of supply is the date of delivering the goods at the disposal of the customer.
Several activities in the exempted financial sector are included in the implementing regulations of the VAT system.
These activities include interest on loans or lending fees charged with an implicit profit margin, including loans and credit cards, mortgages, finance leases, banknotes or securities transactions, as well as current accounts, deposits and savings accounts.


King Salman, Crown Prince Mohammed ‘lend new dimension to unification’

Millions of citizens plan to celebrate the Saudi national day on Sunday. (SPA)
Updated 20 min 22 sec ago
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King Salman, Crown Prince Mohammed ‘lend new dimension to unification’

  • More than 900,000 fireworks will light up the sky from 58 locations across the Kingdom

RIYADH: Saudi Arabia’s National Day, celebrated every year on Sept. 23, has come a long way in broadening the concept of unification over the years.
Though the National Day meant unifying disparate sheikhdoms under the nation’s founder, the late King Abdul Aziz, its implications across the political, socioeconomic and cultural spectrum have not been lost on successive rulers.
It was King Salman and Crown Prince Mohammed bin Salman who fine-tuned the definition of unification as an operating philosophy. This is why millions of citizens plan to celebrate the Saudi National Day on the streets on Sunday.
The capital city, along with other Saudi cities, will witness fireworks and the unfurling of the largest national flag. More than 900,000 fireworks will light up the sky from 58 locations across the Kingdom.
Car owners, limousine drivers and young Saudi motorcyclists said that they planned to go for drives, particularly on the fashionable streets of the capital city, to celebrate. Grocery shops, stationery shops and vendors were selling bunting, flags, banners and pictures of national heroes.
“We went around the city to see the lighting and fireworks,” said Saleh Al-Omri, a local pharmacist. “Green and white balloons fill either sides of Riyadh streets,” he said.
In his National Day congratulatory message, Sheikh Abdul Aziz bin Abdullah Al-Sheikh, Grand Mufti of Saudi Arabia, said: “The wise policy of the leaders of this country contributed to peace, security and stability.”
Fakhr Al-Shawaf, chief executive of Al-Bawani Contracting Co., said: “We are celebrating the 88th anniversary of our unification, a day when the late King Abdul Aziz established the Saudi nation.”
Ali Al-Othaim, a member of Riyadh Chamber’s board of directors, said: “The Kingdom is on the path of comprehensive economic and social development under Vision 2030.”
Shafik Namdar, a taxi driver, said that he had bought an SR10 flag for his car and planned to work and also drive with his friends to look at the city and its landmark buildings.
Several young boys, including Arslan, 12, and Mishal, 14, said that they had bought bunting, badges and flags to decorate their houses. They planned to celebrate with a special meal at home with relatives, before going into the city streets for dance and music. Some of them had plans to organize celebrations in public parks.