The date of supply for taxation purposes is deemed to be the earliest of date of invoice, payment date or date of supply. Invoices should be issued at the latest by the 15th of the month following the taxable supply. In the case of periodic payment installments of the supply, a separate supply takes place on the earlier of the due date for the installment payment or payment for the installment.
Self supplies
Goods or services provided by a taxable business to itself are considered outside of the scope of VAT
Goods or services provided to members of a VAT Group by another member of the same group are outside the scope of VAT
Vouchers
Vouchers for the redemption of a taxable supply are not considered a taxable event subject to the following conditions
The face value is equal to the redemption value
Place of supply
For B2B cross-border transactions, the supplier must obtain the tax identification number of their customer
The place of supply for electronic and telephonic services will be based on the location of the consumption. Criertia for determining the place of consumption/residence includes:
Invoice address
Bank account location
IP address of customer
SIM card address
Supply of live cultural, sport, education and entertainment place of supply will be the physical location of the supply
Goods or services supplied outside of the country are exempt
Supplies made from outside of the Kingdom to within the Kingdom are considered taxable supplies if provided with transport services
Exports may only be exempted from VAT if the supplier obtains proof the departure of the goods from the Kingdom
Determining fair market value
The tax authorities may re-determine the taxable value of a transaction where
There is a supply between related parties
Where the value is below the fair market value
The customer is not entitled to a full input VAT deduction
The supply is made without consideration
Cash-based VAT accounting
Taxable businesses may apply for cash-based VAT reporting if their annual sales are below Riyals 5million
An successful application must be adopted for a minimum of two years unless the threshold is exceeded
Cash-based VAT accounting calculates the VAT due only on VAT paid or received
Input VAT deductions
Tax registered businesses may deduct input VAT from the charged output VAT levied
Input VAT incurred on services enjoyed 6 months prior to VAT registration may be used
Input VAT suffered on goods used for the services but paid for prior to the VAT registration may be deducted. The value of capital goods will be the net book value
Input VAT deductions on expenditure not related to the economic activity are not permitted for the following:
Entertainment, sport or cultural events
Hotel and restaurant catering services
Second hand cars, including repairs and fuel
Input VAT incurred relating to exempt supplies are now deductible
Proportionate deductions are permitted, by prior agreement, where the input VAT relates to goods or services partially used in the supply of taxable supplies. A default calculation is available
Input VAT may be recovered when incurred in relation to capital raising, the transfer of a going concern and other one-off events incidental to the taxable business activity
Special rules apply to VAT deductions on capital assets apply
Reverse charge
In certain circumstances involving non-resident suppliers, the customer will be responsible for declaring the output and input VAT
This includes resident electronic marketplaces and portals where the operator buys from a non-resident provider an e-services for onward supply to local consumers
Supply of used goods
Eligible used goods may be sold under the profit margin scheme, once approved by the tax authorities
The taxable margin is calculated on the difference between the purchase price and sales price
Imports
There is a low-value import relief of Riyals 10,000 for imports by consumers
Imports of special needs goods are VAT exempt
Regular importers may apply for a deferral of import VAT, and payment via their subsequent VAT return
Record keeping
Tax payers must maintain supporting VAT accounts and records for at least 6 years
Records must be maintained in Arabic
Electronic records must be maintained in the Kingdom for resident companies, or have portal access to the tax authorities if outside of the territory
A Saudi tax representative is required to maintain the invoices, books, records and accounting documents of non-resident businesses
