BMS Auditing provides VAT services in Saudi Arabia within our complete tax consultancy package. Value Added Tax is an indirect tax levied on the consumption of goods and services at various stages of the supply chain. All through the supply chain, from when a manufacturer buys raw materials to when finished goods are sold to consumers, VAT comes into play. VAT-registered businesses collect this tax from their customers and remit it to the government.
What is VAT Registration?
All economic operators, natural persons, or juridical persons, shall be registered for VAT, except as otherwise provided. First, registration for VAT is mandatory whenever the annual taxable supplies exceed SAR 375,000. This, consequently, means that once the threshold is exceeded, businesses must register within 30 days after the end of the month when they did so.
VAT Calculation
There are two methods of calculating VAT, namely, the prospective test and the retrospective test.
Retrospective Test
In this method, it computes the total value of the supplies made for the past month by aggregating the value over the previous 11 months.
Prospective Test
In this method, it estimates the total value of the anticipated supplies to be made in the following 12 months.
Typically, all Saudi Arabian taxpayers will begin registering under the retroactive test. In case of an application made for registration, the effective date begins at the beginning of the next month.
VAT Rate in Saudi Arabia
VAT was introduced in Saudi Arabia on January 1, 2018, at a minimum of 5%. In 2019, the SAR 375,000 threshold value was applied, and the rate rose to 15% beginning on July 1, 2020. The businesses must be up-to-date with such changes.
Some goods are considered by tax laws as within the exemption line of VAT or zero-rated, including:
- Goods and services exported outside the GCC.
- International transport services.
- Medicines and medical products are eligible.
When is VAT Levied?
VAT is levied on the earliest of the following dates:
- Date of supply of the goods and services.
- Date of tax invoice.
- Date of the receipt of payment, either partially or wholly.
For those whose annual revenues exceed SAR 40 million, the VAT returns should be filed monthly. If one's revenues are less than that, it is every quarter as it is necessary to file VAT returns.
What is VAT?
To find out whether someone falls within the scope of VAT application or not, ask these questions yourself,
- Is the supplier registered for KSA VAT?
- Is there a supply of goods or services?
- Is there consideration, whether monetary or non-monetary payable for the supply?
- Does the supply fall under tax?
- Is it a place of supply in Saudi Arabia?
If you have answered "yes" to all these questions and the supply is not zero-rated, then VAT is applicable.
Why Choose BMS Auditing?
The issue of VAT can be quite confusing. Let BMS Auditing help. Our expert team is dedicated to simple-to-follow tailored VAT services that can make your compliance easy and reporting accurate. We offer our assistance with:
- VAT registration and filing.
- Tax planning and impact assessments.
- Proper documentation and record-keeping.
Come and let's walk you through the VAT process, get the best out of your tax liabilities, and meet the set regulation standards in Saudi Arabia and beyond. Contact us to talk about how we can support your business here!
